Zimbabwe

Lord Blaker: asked Her Majesty's Government:
	What is their assessment of the incoming Government of Zimbabwe.

Lord Bach: My Lords, it is clear to the world that the so-called election last Friday was a complete sham and that, as African observers have already said, it did not reflect the will of the people. It is not surprising that Morgan Tsvangirai and the MDC felt that they had to withdraw, given the horrendous levels of violence and intimidation. We will continue to press for a resolution that reflects the political choice of the people as they voted on 29 March.

Lord Blaker: My Lords, there are so many threads in this picture that it is difficult to know which ones to pick up but I shall briefly mention three. The first is that support is flowing away from Mugabe. He has been criticised by Mandela, two archbishops, the Secretary-General of the Security Council, the G8, the EU, SADC observers, which is significant, and the African Union, which is also significant. Therefore, it is a case of Mugabe against the world. The second is the position of Mugabe's military, which played a very big role in the terror over the past weeks in return for Mugabe giving up his idea of retiring. Finally—

Noble Lords: Question!

Lord Blaker: My Lords, does the noble Lord agree that it is important that we should not play too big a role in this scene and that it is for the Africans to deal with?

Lord Bach: My Lords, I agree with everything that the noble Lord said. We should not play too big a role, and it is important that the Security Council, the African Union and SADC work together on this. However, we do have a role and a strong view on this, and anything that we can do to help to resolve this outrageous position, we will do.

Lord Elystan-Morgan: My Lords, in the light of the fact that the second presidential election in Zimbabwe was held beyond the 21-day limit legislated for in the constitution and that it appears that the MDC and its allies have an overall majority of about nine in the Zimbabwean Parliament, is there any possibility of the Parliament being able to exercise any practical pressure on Mugabe and his henchmen, who usurp power in that country?

Lord Bach: My Lords, the noble Lord's points are good ones. There is no doubt that in the legitimate elections held in March the MDC won a majority in Parliament and the opposition candidate for president certainly got more votes than President Mugabe. I pay tribute to the bravery shown by MDC opposition politicians over a long period and to those who voted for them last week. Whether the politicians who make up a majority in the Parliament will feel able to take a stand is very much a matter for them, but we need to understand the appalling situation that exists in that country in terms of the number of people who have already died and the violence and threats that made up the election that was supposed to take place last Friday.

Lord Trimble: My Lords, in view of the point made in the previous question that the run-off election was outside the due time under the Zimbabwean constitution and that in the legitimate elections Mugabe was beaten both in the presidential election and in the parliamentary election, why do the Government not just simply withdraw recognition of the regime?

Lord Bach: My Lords, it is extremely tempting to do so, but we have to think very carefully whether that is sensible at this time. All options are possible. We recognise states, not governments, and Mugabe is not a legitimate president. However, 14,000 or so British citizens live in Zimbabwe. At present, we believe that it would be wrong not to have some representation for those people, especially given the very difficult circumstances that I have tried to outline.

Lord Avebury: My Lords, are we ready to tighten the screws on the ZANU-PF elite, for example, by halting the three-times a week flights by Air Zimbabwe from Zimbabwe into Gatwick and by persuading the Germans to halt the printing of bank notes, which have fuelled the 9 million per cent inflation? As it will be impossible to send Zimbabwean asylum seekers back there in the near future, will the noble Lord answer the question which has been put to him by my noble friend Lady Williams about allowing Zimbabwean refugees in this country to work, particularly in activities that will contribute to the rebuilding of their country when they are able to go home?

Lord Bach: My Lords, on asylum, I make it clear that we have no current plans to enforce returns to Zimbabwe and will not do so until the current political situation is resolved. On the work position, as my noble friend Lord Malloch-Brown, who, as we speak, is at the AU meeting in Sharm el-Sheikh, said last week:
	"We are looking at the support that we may need to give Zimbabweans in this country, particularly at the ban on refugees taking up work".—[Official Report, 23/6/08; col. 1258.]

Lord St John of Bletso: My Lords—

Lord Morris of Handsworth: My Lords—

Baroness Ashton of Upholland: My Lords, it is the turn of the Labour Benches.

Lord Morris of Handsworth: My Lords, I declare an interest as a member of the England and Wales Cricket Board. I welcome the decision to stop Zimbabwe's cricket team playing bilateral matches with England. Are there any plans to stop the Zimbabwean cricket team visiting England for the Twenty20 World Cup next year? If not, what will the position be if England meets Zimbabwe in the finals?

Lord Bach: My Lords, there are no sporting sanctions as such on Zimbabwe. However, international sport should never be a way for dictators to publicise their misrule. As my noble friend says—I am grateful for his comments—we have made it clear that we do not want the bilateral tour to go ahead and that we will do all in our power to prevent it from going ahead. We have also—I hope this answers the question—asked the ECB to represent to the International Cricket Council our serious concerns about the situation in Zimbabwe and ask the ICC to reconsider its inclusion in the Twenty20 World Cup.

Lord St John of Bletso: My Lords, can the Minister please elaborate on what measures can be taken to allow duly elected MDC Members of Parliament to take their seats?

Lord Bach: My Lords, I wish I could. Given the state of government in Zimbabwe at present, anything I said on that would have every prospect of not being accurate. One hopes that those properly elected Members of Parliament will be allowed to take their seats and to exercise their powers in the proper way. We hope for so much for that country, and so far we have seen so little.

Lord Roberts of Llandudno: My Lords—

Baroness Ashton of Upholland: My Lords, we are in the ninth minute. The noble Lord must sit down.

Mental Health: Section 136 Facilities

The Lord Bishop of Southwell and Nottingham: asked Her Majesty's Government:
	How many dedicated Section 136 suites in mental health trusts have been opened in England and Wales.

Baroness Thornton: My Lords, we have good reason to believe that the extra resources that have been made available for investment in adult mental health services are being used to develop a growing number of dedicated Section 136 facilities. However, the Government do not hold information centrally for the total number of such facilities.

The Lord Bishop of Southwell and Nottingham: My Lords, I thank the noble Baroness for that reply. In Nottingham, all detained under Section 136 of the Mental Health Act, other than those requiring physical health needs urgently to be addressed in A&E units, are taken to a police station as a place of safety. I appreciate that Her Majesty's Government have allocated money to build suitable assessment units in psychiatric hospitals, but what assurance can the Minister give that facilities will not fail to open due to a lack of staff? How will Her Majesty's Government monitor the availability of these suites to help patients in need?

Baroness Thornton: My Lords, I thank the right reverend Prelate for his questions, which are entirely reasonable. The capital funding allocated by the Department of Health in 2006 included £1.35 million for Nottinghamshire Healthcare NHS Trust to build a new eight-bed unit, including a Section 136 facility. Indeed, a condition of the funding was that Nottinghamshire met the revenue costs. There really is no reason why NHS bodies locally, in partnership with other relevant agencies, should not provide appropriate facilities and arrangements.
	On the right reverend Prelate's second question, we have given some thought to monitoring in respect of Section 136. The primary responsibility for ensuring effective and appropriate use of Section 136 lies with the responsible local agencies. However, our revised code of practice to the Mental Health Act makes it clear that locally agreed policies must include arrangements for effective monitoring of how, in what circumstances and with what outcome Section 136 is being used locally.

Baroness Meacher: My Lords, the fact that severely mentally ill people still spend many hours languishing in police cells reflects a much wider failure to invest sufficient resources in in-patient units and services. The result is that the current risk is unacceptable. Will the Minister seek from strategic health authorities an assurance that they will review the levels of risk and the quality of services in in-patient units as well as the availability of Section 136 suites and that they will spend sufficient money to ensure that there is an acceptably low risk?

Baroness Thornton: My Lords, I am very happy to revisit this question, but we have made it clear in our revised code of conduct that police stations should be used only exceptionally as a place of safety under the Act. There is clearly much to do, as they are used much too often. The code stresses that it is preferable for people to be detained in a hospital or other healthcare setting where mental health services are provided.

Lord Elton: My Lords, does the noble Baroness realise how encouraging it is to hear that she is aware of this as a problem that the Government must tackle earnestly? Does she also realise how much that pleases me, given that, when I was a Minister in the Department of Health and Social Security in 1982 and, later, when I had responsibility for the Prison Service, I was faced with exactly the same cries about insufficient secure beds in NHS services for the number of people who needed them? The result is treatment that is not acceptable.

Baroness Thornton: My Lords, the noble Lord is correct: we are driven by a desire to prevent and minimise people with mental disorders coming into contact with police and being detained by them. He is absolutely right that we need to improve access to healthcare.

Baroness Murphy: My Lords, I shall expand a little on what the noble Baroness, Lady Meacher, asked because I think she was trying to get a rather broader response. What are the Government doing to ensure that mentally ill people who can and want to access emergency and inpatient services can do so with confidence that they are of such a quality that they do not have to deteriorate to the point where a Section 136 is necessary, so they can get in early? What are the Government doing to ensure that services are of an acceptable quality that people want to use?

Baroness Thornton: My Lords, the noble Baroness will be aware from experience that the Government have made the provision of services to those with mental illness a priority, which has included an additional £130 million capital funding to the NHS in England to assist with the development of dedicated healthcare-based facilities, including for people detained under Section 136, but not only for them.

Baroness Barker: My Lords, will strategic health authorities monitor the provision of acute mental health services in rural areas? It is evident that in some rural areas police stations are overused as places of safety because of a lack of facilities.

Baroness Thornton: My Lords, I need to repeat what I said earlier: monitoring is a local responsibility. However, the Independent Police Complaints Commission is expected shortly to publish findings on the use of police stations under Section 136, which will include rural facilities. The Royal College of Psychiatrists working group is developing an agreed approach to recording information about the use of Section 136. Both those things will help to take this forward.

Earl Howe: My Lords, will the future Care Quality Commission have a role in setting and monitoring standards in this area?

Baroness Thornton: My Lords, the noble Earl is aware that it will. I hope that the CQC will take this up very seriously.

Office of the Public Guardian: Lasting Powers of Attorney

Baroness Gardner of Parkes: asked Her Majesty's Government:
	What action they propose to deal with delays encountered by those wishing to create new lasting powers of attorney.

Lord Hunt of Kings Heath: My Lords, since October 2007, the Office of the Public Guardian has seen a significantly higher than predicted number of applications to register lasting powers of attorney. A strategy to deal with the high volume has been implemented, and improvements are starting to be seen. I expect further progress to be made over coming months.

Baroness Gardner of Parkes: My Lords, I thank the Minister for that reply. Does he accept that it is now taking four months to set up a lasting power of attorney where it took only a month to set up the old one, that costs have risen fourfold to more than £1,000 a time and that relatives now have to complete two forms, each of 25 pages, compared with a single four-page document previously? Is any consideration being given to reducing those 25 pages?

Lord Hunt of Kings Heath: My Lords, I think that the cost must refer to the cost of lawyers, which is a question between the client and the lawyer. Some of the time built into the new system is because of the safeguards that were deemed to be necessary and were thought to be absent from the previous system. I have copies of both forms, which were carefully prepared in consultation with stakeholders. However, I am sure that over the next few months there will be an opportunity to take account of the comments made by the noble Baroness. We are committed to reducing the time for the overall process to the absolute minimum.

Lord Thomas of Gresford: My Lords, does the Minister accept that one of the problems with lasting powers of attorney is that people who enter into them are often ill and frail? Filling out 25-page forms is not the easiest thing for them to do, and they may be subject to influences. What would the Minister do to publicise the benefits of people entering into a power of attorney of this nature when they are relatively in charge of themselves and understand all the implications?

Lord Hunt of Kings Heath: My Lords, I understand the point that the noble Lord raises. The problem has arisen because the number of applications per month reached 6,000 last month against an estimate, when the new policy was enunciated, of around 2,600 a month. That suggests that, notwithstanding the short-term problems with the timetable, the message about the importance of the lasting power of attorney is getting through to potential donors. I entirely understand the point that he makes about the forms, and I am sure that, as part of the review after 12 months of the operation of the new system, that matter will be looked at carefully.

Baroness Greengross: My Lords, when there are delays and when money from the person's account is needed—for instance, to pay care home fees—what provisions are there to enable access to funds prior to registration?

Lord Hunt of Kings Heath: My Lords, I assume that the noble Baroness is referring to a situation where a person has not yet become registered. Clearly that will depend on the circumstances of the individual. Under Section 5 of the Act, there are provisions to enable a person to act on behalf of an individual on that basis. Ultimately, application can be made to the Court of Protection.

Lord Campbell-Savours: My Lords, the point raised by the noble Baroness, Lady Greengross, is absolutely correct. Difficulties are being experienced by people in precisely those circumstances. Will my noble friend undertake to look at that matter specifically and perhaps write to us?

Lord Hunt of Kings Heath: My Lords, of course I am happy to look at the matter, but it should be remembered that the lasting power of attorney was not meant for emergency use; it is there to enable a person to plan their future in good time. That is why, as I just mentioned, there are the provisions in Section 5 of the Act and, ultimately, application to the Court of Protection, which allows a matter to be dealt with immediately if an application has not yet been registered.

Lord Campbell of Alloway: My Lords, with respect, I think that the noble Lord is not right. The power of attorney is often used at a time of momentary distress, often with instructions to look after children. I speak from professional experience. It is then, at times, forgotten about and left there. It is a difficult situation, but it ought not to be regarded as a merely temporary arrangement, as the noble Lord said.

Lord Hunt of Kings Heath: My Lords, I am not sure that I did get it wrong. I was referring to circumstances where an application has been made but has not yet reached full registration, where there are provisions to allow the matter to be dealt with. I think that the noble Lord is referring to what are sometimes described as fluctuating conditions, where a person may have capacity at one point but not at another. The whole point about the new structure is that it is designed to be flexible enough to deal with those circumstances.

The Countess of Mar: My Lords, is the noble Lord aware that his honourable friend in another place, Bridget Prentice, has been organising a series of seminars with her staff? I attended the first one last Monday, which I found extremely helpful and recommend to other noble Lords. She is holding more such seminars, where staff explain why it has been taking so long to deal with the matter, why they have to raise fees—because they have to be self-supporting—and why there are two forms. I ask the noble Lord to recommend the seminar to other noble Lords.

Lord Hunt of Kings Heath: My Lords, I think that this is the first time in eight years that I have been able to say that I thoroughly endorse the views of the noble Countess.

Lord Elton: My Lords, the noble Lord has made it clear that the principal hold-up is an excess of work falling on those who have to grant the powers. Surely, when there is too much work, it is a good thing to have some more workers.

Lord Hunt of Kings Heath: Yes, my Lords, and part of the improvement programme has been to put more people to work in the registration system, alongside more IT equipment. That is why the time taken to deal with registration, where there is nothing wrong with the way in which the form has been filled in, is expected to be back on target by the end of August.

Earl Attlee: My Lords, why not just have shorter forms?

Lord Hunt of Kings Heath: My Lords, because these forms are easy to read. Whatever other defects noble Lords might find in them, they are absolutely clear to read. I am sure that they resulted from consultation, which said that many previous forms were too small and difficult to read. I fully accept that we can learn the lessons from the past few months. The October review will take this into account. If the forms need to be changed, they will indeed be changed.

Carbon Emissions

Lord Trefgarne: asked Her Majesty's Government:
	What has been the percentage increase in the carbon dioxide content of the atmosphere over the United Kingdom as a whole since the Second World War.

Lord Rooker: My Lords, my department has funded CO2 measurements at Mace Head in the Republic of Ireland since 1987. There, the latest annual average is 385 parts per million, which is the same as that measured in Hawaii, where continuous measurements of carbon dioxide have been made since 1958. Carbon dioxide is well mixed in the atmosphere; therefore, the issues are comparable. The percentage increase from 1958 to today is approximately 22 per cent; that is, from 315 parts per million to 385 parts per million.

Lord Trefgarne: My Lords, I am grateful to the noble Lord for that reply. Is it not important to get these matters into proportion? Whatever may be the percentage increase over the period given by the noble Lord, does not the absolute figure remain microscopic? Is it not very difficult to believe that that microscopic figure is responsible for whatever global warming has taken place in recent years, particularly since, in very recent years, there appears to have been no global warming at all?

Lord Rooker: My Lords, the latter point is not correct. The averages may not have changed, but land temperature has increased considerably more than sea temperature because, in the Pacific, El Niño is a cooling factor—part of the ebb and flow. That has now switched off, as I said to my noble friend Lord Sheldon the other week. Therefore, the average can be very misleading.
	An increase of 22 per cent, or of one-fifth—I earlier asked officials about this—in CO2 since 1958, when measurements began in a consistent way by US scientists in Hawaii, is a considerable part of the problem. Of course, the figures I have given relate only to the Question and to CO2. Figures for greenhouse gases are much higher, at 432 parts per million. All the evidence indicates that somehow we have to stabilise them at less than 500 parts per million; otherwise, we will not need to bother about future weather forecasts.

Lord Barnett: My Lords, knowing how well my noble friend briefs himself, I assume that he has now taken the opportunity to read the book written by the noble Lord, Lord Lawson. Even if he agrees only with part of it, like me, would he accept that making decisions on climate change, which are based on the assumption that forecasts for 50 years and 100 years are accurate, does not make a lot of sense to anyone, especially as it is very difficult to make forecasts for next week?

Lord Rooker: My Lords, my noble friend makes a point. No, I have not done the noble Lord, Lord Lawson, the justice of reading his book but, after the kind things he said about me a couple of weeks ago, I promise to make it a top priority. Leaving aside the forecasts for 100 years hence, let us look at the impact of what has already happened with greenhouse gas concentrations. Since 1900, the earth's temperature has warmed by 0.8 degrees centigrade, much of which was in the past 50 years. Sea level has risen by 20 centimetres in the 20th century. The northern hemisphere's snow cover has decreased in every month except November and December over recent decades. In the late 1980s, average snow cover dropped by 5 per cent. Arctic sea ice coverage has undergone long-term decline at all times of the year in recent decades. Last year, the extent of summer sea ice reached a record low. Those things have happened. They are not related to 100-year forecasts. Something is happening with the climate and the consensus says that we should be mindful and take some action.

Lord Lawson of Blaby: My Lords, I am very grateful to the Minister for undertaking to read my book. It is short, and he will find it easy. Perhaps we may discuss it afterwards. But it really will not do to cherry-pick examples as he has done. Arctic sea ice, for example, has declined. Antarctic sea ice has increased over the past year by more than it has for many years. The average temperature is the average temperature, which he quotes when it suits him. He decries it when it does not. Does the Minister agree to look at this issue with an open mind and not perhaps be over-influenced by his department's Chief Scientific Adviser, who is a very committed person in this dispute? In fact, there are scientists on both sides, and a substantial minority—30 per cent—disagree with the conventional wisdom.

Lord Rooker: My Lords, to be honest, I have not had discussions about the long term with the department's Chief Scientific Adviser, a Nobel Peace Prize-winning scientist on this issue, who speaks for the majority of scientists, a point made by the noble Lord. The fact is that the figures I have given are those measured by earth-based stations. There are other ways of measuring what has happened with CO2 in ice, for example, and using satellites, which are not so accurate. The fact of the matter is that concentrations of CO2 are reckoned to have increased by 35 per cent since 1750, when the concentration stood at about 280 parts per million and is now higher than it has been for the past 800,000 years—I repeat, higher than for the past 800,000 years. It may be that in the ebb and flow of time CO2 levels will go down again—in another 800,000 years—but we need to be able to do something today if something is happening to the atmosphere that is caused by man. That is the issue: is climate change man made or not? The consensus is that it is.

Lord Teverson: My Lords, we agree strongly with the Minister's and the Government's sense of urgency over this matter. One of the big growth areas in recent years has been that of aviation and air travel. Could the Minister outline what the Government are urgently doing now to reduce those emissions, such as in the area of airport expansion?

Lord Rooker: My Lords, we are not going to be childish and stop people taking cheap holidays, which is what the Lib Dems want us to do. We cannot do anything as a nation on aircraft emissions; it has to be done internationally. The initial first stage will be through the European Union. There is a plan for the Union to take on aircraft emissions as a whole in phase 3 of the emissions trading system, which will start from 2012. This cannot be done by individual countries; it has got to be done with international agreement. To start with, we have European-wide support from 2012. It is a very thorny issue and we agree with the noble Lord, but it cannot be done by one country alone.

Business

Baroness Royall of Blaisdon: My Lords, with the permission of the House, my noble friend Lord Darzi of Denham will repeat the Statement entitled "NHS: Next Stage Review" at a convenient point after 3.30 pm.

Pensions Bill

3.07 pm

Lord McKenzie of Luton: My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved accordingly, and, on Question, Motion agreed to.
	House in Committee accordingly.
	[The LORD SPEAKER in the Chair.]
	Clause 28 [Power of trustees to modify by resolution]:

Lord McKenzie of Luton: moved Amendment No. 84:
	Clause 28, page 13, line 21, after first "scheme" insert "—
	(a) "

Lord McKenzie of Luton: I shall speak also to government Amendment No. 85. Clause 28 enables trustees, with the employer's consent, to make changes to an occupational scheme so that it can be used for automatic enrolment under the employer duty. We want to do as much as possible to encourage employers to retain their existing generous pension provision, so we have tabled Amendments Nos. 84 and 85 to extend the modification power. The amendments enable trustees, with the employer's consent, to change the rules of a scheme to increase the contribution rate and the basis of its calculation in order to satisfy the quality requirements for both occupational money purchase and certain hybrid schemes. As we have already discussed, money purchase schemes must require contributions of at least 8 per cent of qualifying earnings of which a minimum of 3 per cent must be paid by the employer. We recognise that many schemes provide for higher contributions than the minimum default required under the reforms, and that such schemes will satisfy the quality requirement without needing to make adjustments.
	However, other schemes will not, so the trustees and the employer may want to make changes to the rules to meet the required standard. These amendments to Clause 28 will facilitate such changes. This may be particularly helpful to employers offering schemes with restrictive rules that might otherwise prevent such changes being made. Where the power under Clause 28 is used, employers will not be required to consult scheme members on such modifications.
	However, we have ensured that the necessary safeguards are in place to protect members' interests. Changes made under the proposed amended Clause 28 must increase contributions. Any other changes can be made using provisions elsewhere in pensions legislation and will be subject to the normal rules on consultation with scheme members. This is to discourage levelling-down and retain the existing protection for scheme members through the consultation requirements. I hope noble Lords will support the amendments. I beg to move.

Baroness Noakes: We have debated some of the issues that lie behind these amendments already in Committee. The amendments are part of the Government's denial of the problems that the definitions in the Bill will involve. They are happy to grant the trustees a power to alter the scheme rules to allow an employer to pay more or more often into a scheme, but they have not recognised that the problems the Bill will cause will operate in a different way. Employers will have to pick up the costs of any rule changes, either directly or indirectly, and Clause 28 correctly requires employer consent. But they will not give that consent unless there is some advantage to them, and it is not obvious what the advantage will be of increasing contributions under the Bill.
	We will not oppose the amendments, but they do not address the real issues that will arise under the Bill of why employers would want to incur costs to amend their own scheme—not only by paying more in but by changing the rules and their payroll systems to meet the definitions we discussed on our previous Committee day in connection with the group of amendments under Amendment No. 60A. The difficulties are so great that it would be easier for employers not to amend their existing schemes but simply to let personal accounts take over. Levelling-down is the elephant in the Committee. The Government cannot wish it away with amendments like this.

Lord Oakeshott of Seagrove Bay: To some extent, the Government have got their timing wrong. If we were clearer on exactly how they see this working, we would be happier. Like the noble Baroness, we do not oppose the amendments in principle, but it looks as though the Government have not got their ducks in a row, if I may put it that way.

Lord McKenzie of Luton: I am surprised at the reaction to these modest provisions. The noble Baroness asked what would encourage employers to make changes under their schemes to comply with the auto-enrolment and quality requirements of the Bill. It is fairly obvious: they would want to have, as they do now, good quality provision for their employees. They see the competitive advantage in many cases of good scheme provision and they do not want unwittingly to fall foul of the rules relating to qualifying earnings.
	Qualifying earnings underlie the amendments and other matters that we will discuss. The Government's aim is to maximise the number of new savers and savings and to support existing pensions arrangements. We do not want to disrupt arrangements that offer good pension outcomes for savers. As noble Lords know, a number of stakeholders raised concerns about the practical arrangements for dealing with scheme qualification in relation to qualifying earnings. We discussed some of these when we debated amendments to Clauses 12 and 19.
	Since then, the Minister of State for Pensions Reform and I have been talking to stakeholders about how we can make the test as simple as possible while still preserving the new minimum level of pensions savings. We focused on a suggestion by a group of four stakeholders—the ABI, NAPF, ICAEW and SPC—the essence of which is annual reconciliation, which we have also been thinking about for a while. A key objective for the Government is to avoid disruption for existing schemes so that good arrangements may continue to function beyond 2012 without unnecessary changes or additional administrative processes. More detailed discussions with key stakeholders are already planned, and I fully expect to be able to be clear about our approach on Report. I hope that that has reassured the noble Baroness and indeed the noble Lord, Lord Oakeshott.

Baroness Noakes: That was most encouraging. The issue will not go away, as we said on the previous Committee day, and I am glad that the Minister has taken the Government's thinking a little further forward. There is clearly some way to go, but I am grateful for what he has put on record.

On Question, amendment agreed to.

Lord McKenzie of Luton: moved Amendment No. 85:
	Clause 28, page 13, line 22, at end insert ", or
	(b) by increasing the amount required to be paid in contributions, in order for the scheme to satisfy the requirements contained in section 19(1) or those requirements as modified under section 23(1)(a).
	( ) An increase under subsection (1)(b) may be made only—
	(a) by increasing the amount of any contribution, directly or by modifying the basis on which it is calculated, or(b) by increasing the frequency of any contributions."
	On Question, amendment agreed to.
	Clause 28, as amended, agreed to.
	Clause 29 [Deduction of contributions]:

Lord McKenzie of Luton: moved Amendments Nos. 86 to 88:
	Clause 29, page 13, line 33, leave out "an occupational pension" and insert "a"
	Clause 29, page 13, line 34, leave out "6(3) or" and insert "or 6(3), or of an occupational pension scheme in accordance with section"
	Clause 29, page 13, line 36, at end insert "(in the case of an occupational pension scheme) or the provider of the scheme (in the case of a personal pension scheme)"
	On Question, amendments agreed to.

Lord McKenzie of Luton: moved Amendment No. 89:
	Clause 29, page 13, line 36, at end insert—
	"( ) Regulations prescribing arrangements for the purposes of section 3(2), 5(2), 6(3) or 8(2) may require the employer to make such a deduction or payment at any time on or after the date with effect from which the jobholder is to become an active member of a scheme under the arrangements.

Lord McKenzie of Luton: Clauses 3, 5 and 6 require employers to enrol or re-enrol their jobholders to a pension scheme. Clause 29 then permits employers to deduct pension contributions from the individual's pay and pass that money to a scheme. Amendment No. 89 clarifies that regulations prescribing the automatic enrolment process may require the employer to start making pension deductions from a jobholder's salary from the first pay day after automatic enrolment. In practice, that means that if a jobholder is paid between the time they are automatically enrolled and the time when all the practical arrangements to get them into pension saving have been completed, the employer may be required to deduct pension contributions from their wages. That ensures that pension saving can start from the day a jobholder is automatically enrolled. I beg to move.

Lord Skelmersdale: This is the fifth or sixth of a large group of government amendments that we are due to look at today. Many of them are eminently sensible, but as my noble friend Lady Noakes has just said, we have queries on some of them. Incidentally, by my count, the number of amendments that the Minister's advisers hope we will get through by the end of the day is 77. I suspect that they are a little erroneous in that view, but we shall see.
	Amendment No. 89 is supposed, as the Minister said, to allow the deductions to be made from the first pay day after the auto-enrolment. However, the amendment does not actually say that; it says,
	"at any time on or after the date with effect from which the jobholder is to become an active member of a scheme under the arrangements".
	If it said what the Minister thought it said, I would be perfectly happy, but
	"at any time on or after"
	does not give me that confidence.

Lord McKenzie of Luton: This is part of a continuing debate we are going to have about the structure of the Bill. It is about taking a power so that we can ensure that employers have to deduct upfront under any arrangements; otherwise, some might be tempted—although I accept that this is overwhelmingly not the case—to take contributions later on, even though there is an automatic enrolment requirement from day one. That would disadvantage employees in respect of their pension arrangements. This provides for a power so that the regulations can make clear when those deductions can and should take place and require that they take place upfront.
	The noble Lord will be aware that the precise mechanics of auto-enrolment and the opt-out period are still being worked through, which is why the provision is perhaps not as prescriptive as he would like, but the intent is very clear: to prevent arrangements being put in place whereby contributions were taken from employees down the track, after they had been auto-enrolled, so that they did not get the full benefit of that auto-enrolment. I accept that the provision is not as prescriptive as the noble Lord would wish, but these powers are part of the structure of the Bill and enable what we want to happen. I think we have agreement on what we want to happen.

Lord Skelmersdale: I fully understand what the Minister wants to happen, but I do not think, with the best will in the world, that the amendment achieves it. The Minister quite rightly wants the money to be taken on the first pay day after auto-enrolment—I accept that; it is absolutely right—but I advise him to withdraw the amendment and think it out again.

Lord McKenzie of Luton: The amendment seems to be pretty straightforward. It states:
	"Regulations prescribing arrangements for the purposes of section 3(2), 5(2), 6(3) or 8(2) may require the employer to make such a deduction or payment at any time",
	et cetera. The noble Lord may balk at the term "may", rather than "should" or "will", being used, but the amendment provides a power so that regulations can require the employer to make those deductions from the start. I am happy to ask officials to look at it again, but I believe that it is clear and does not need it.

Lord Skelmersdale: As I have tried to make clear, it is the "et cetera" that worries me.

On Question, Whether the said amendment (No. 89) shall be agreed to?
	Their Lordships divided: Contents, 158; Not-Contents, 65.

Resolved in the affirmative, and amendment agreed to accordingly.
	Clause 29, as amended, agreed to.

Lord Skelmersdale: moved Amendment No. 89A:
	After Clause 29, insert the following new Clause—
	"Means-tested benefits
	(1) Before the coming into force of the other sections of Part 1 of this Act, the Secretary of State shall publish his projections of the numbers of people likely to be subject to means-tested benefits (including housing benefit) and in at risk groups following the introduction of personal accounts.
	(2) If the projected figure published in accordance with subsection (1) exceeds 10% of the total expected pensioner population, the implementation of the scheme under section 58 of this Act shall be postponed for at least 12 months.
	(3) The Secretary of State shall publish any proposals for reform to address the findings in subsection (1) above concurrently with the publication of the projections thereunder."

Lord Skelmersdale: The amendment is reasonably self-explanatory. It is about having a report on means-tested benefits, and would introduce a requirement for the Secretary of State to report on the Government's projections of how the introduction of auto-enrolment into personal accounts—indeed, any account—will impact on those likely to be subject to means-tested benefits. It would postpone the implementation of the scheme if that projection were too high.
	After pressure in another place, the Government have done quite a lot of work on the impact of means testing, and have recently taken steps to slow the growth in the number of pensioners it will affect. I understand that that work is continuing. These reforms to the state pension and the second state pension have had a large impact. Under the Government's original scheme, we would have had nearly 80 per cent of pensioners on means-tested benefits in 2050. Under the new scheme, we are looking at an estimated 30 per cent or so still being eligible. This is a huge improvement, but the number is still high. I am optimistic that there is more improvement to be made. This is not the place for a debate on how this could be achieved, but acknowledgement of the figures is crucial to the success of auto-enrolment, and the question of how to increase the amount of pension saving in the country.
	The underlying assumption that enrolment into a pension scheme is a good thing underpins the whole Bill. From the central implementation of auto-enrolment to the provision of generic advice, the Government will be sending a message loud and clear to the target market that it is a good thing for them to put money into a pension scheme. Even before we get to that point, I believe that the Government need to run a lead-in campaign, probably along the lines of "Tell Sid", which was so successful in persuading people to buy into the privatisation of British Gas in the 1980s. Both messages need to be unambiguous as they will be directed at those who do not have a deep understanding of the issues that surround pension provision and are not placed to assess any government advice against their own circumstances. It is therefore even more important to ensure that this message is not misplaced.
	I know that the Minister will fully agree with me—this time, anyway—on the importance of ensuring that qualifying schemes are seen to be worth while for all those participating. The Government have produced reports and presentations seeking to reassure us that the vast majority of contributors will have a return on their savings and that those who will not could never have been predicted in any way. Some of these studies are still in the pipeline and will further inform the decisions on the final form that personal accounts and qualifying schemes will take.
	If the Government are serious about targeting personal accounts effectively and are careful about the accuracy of their generic advice, the terms of this amendment should not be hard to fulfil. Indeed, some might see it as a necessary benchmark to ensure the accuracy of that information and a crucial step in reassuring the public and the media of the worth of private pension saving. I am particularly worried about the activities of the media in this area.
	This amendment does not seek to drive the Government in a different direction from where they say they intend to go. Instead, it seeks to ensure that decisions around the implementation of auto-enrolment and personal accounts will continue to take account of this issue, even after the Bill has left Parliament. I beg to move.

Baroness Hollis of Heigham: I wonder whether the noble Lord can help me. I am not sure that I fully understand the intent of proposed new subsection (2), which states:
	"If the projected figure published in accordance with subsection (1) exceeds 10% of the total expected pensioner population".
	Does that mean 10 per cent of the pensioner population, or 10 per cent beyond the pensioner population expected to be on benefit, given that about 25 per cent of pensioners draw housing benefit now—that figure is not likely to fall—and that some 30 per cent, perhaps more, will continue to draw council tax benefit? Is he saying that all this must come into play given 10 per cent of a retiring population, or the full existing pensioner population, or is the 10 per cent greater than the pensioner population already in receipt of benefit? Which of the three possible meanings is intended under the proposed new subsection (2)? That may help us to further the debate.

Lord Skelmersdale: Proposed new subsection (2) means much as it says. When the number of people on expected means-tested benefits exceeds 10 per cent of the pensioner population—I put the word "expected" in another part of the amendment; I hope that makes it clearer for the noble Baroness—a report will be published and the introduction will be delayed.

Baroness Hollis of Heigham: Perhaps the noble Lord could help me further. If in 2011, say, the Government were to publish a report stating that they expected that of the total pensioner population in 2012, instead of 30 per cent there might be 25 per cent on council tax benefit, and that instead of 25 per cent on housing benefit, as now, there might be 22 per cent, does that mean that, according to the rest of the proposed new subsection (2), the whole of this Act must be postponed?

Lord Skelmersdale: Yes, it does.

Baroness Hollis of Heigham: Can the noble Lord suggest how, under any circumstances, he will remove council tax benefit and housing benefit from an existing pensioner population—all 11 million or so of them—who are in their existing housing with their existing income and entitlement? How will he bring the number down from 30 per cent or 25 per cent to 10 per cent in order for the second part of proposed new subsection (2) to come into play without making them poorer? Does he propose that they should have that benefit withdrawn, or that the local authority should cut rents, or that the Government should halve council tax? Given that he is dealing with the existing pensioner population, he cannot have more than marginal changes at the edges of the statistics.
	The noble Lord is therefore saying that the amendment would in effect delay the implementation of the legislation to the disarray and discomfort of all the stakeholders involved who have been planning to this timetable. There is no way in heaven or hell that you can deliver proposed subsection (2), given the existing pensioner population who are already in the council houses and flats and housing association homes and claiming council tax benefits now. The amendment is nonsense. It is simply a recipe for delay that would disrupt the entire planning process for all the stakeholders who are working to the 2012 deadline. I suggest that the noble Lord thinks again.

Lord Oakeshott of Seagrove Bay: I shall be delighted if the debate on the amendment means again that not only two can play. I agree with what I am sure is the intention behind the noble Lord's amendment—to highlight the continuing effect and amount of means-testing in the system and to see what can be done about reducing it or at least ensuring that the most high-risk groups are properly protected from it.
	We have already discussed the basic statistics and the basic problem at some length in our debate on the amendments that my noble friend Lady Thomas and I moved on a previous day to try to ensure that generic face-to-face advice was available to the high-risk groups, so I do not want to go over that again. I should say to the noble Lord, Lord Skelmersdale, that the DWP recently published its estimates—I do not expect that those figures will change very much—of the proportion of pensioner households that will be subject to means-testing at different dates. They are, of course, exceptionally high. I remind noble Lords that under the new reform system, as the department calls it, the figure for 2020 is now 55 per cent and still 40 per cent for 2050.
	It might be worth pointing out that the DWP says that it is testing the sensitivities of these assumptions. It states that these four figures,
	"have been tested for sensitivity to plausible changes in underlying assumptions about the future level and distribution of pensioner incomes and future growth in rents and council tax liability",
	which is obviously significant. It continues:
	"Based on these tests the proportion of pensioner households entitled to income related"—
	in other words, means-tested—
	"benefits in 2050 appear to be robust to the changes in assumptions, with pension credit varying by around five percentage points",
	and the other benefits by very little.
	We all know that there will be a serious problem with means-testing for the foreseeable future. Although, if pressed, we would support amendments that seek to ensure that the Government update those estimates, in a way this amendment does not go far enough. I hope that all of us who are concerned about this will think carefully about this before Report. We need not only to know the shape of the figures, which are fairly clear, but to press the Government further on what we are going to do to protect the most at-risk groups.

Baroness Thomas of Winchester: I add to what my noble friend has said by discussing how auto-enrolment into pension provision will interact with those who are likely to be on means-tested benefits in retirement. This is one of the chief concerns of all those who are involved in the Bill, and is one of the great unknowns. The noble Baroness, Lady Noakes, said at Second Reading that it was,
	"something of an evidence-free zone".—[Official Report, 3/6/08; col. 119.]
	Even the redoubtable Pensions Policy Institute said that some of the factors that will have an impact on returns from savings and personal accounts,
	"could be more problematic than others",
	in predicting the point at which saving decisions are taken. It continued:
	"Clearly, nobody can predict with certainty all of their future life circumstances",
	or marital status, and it may be difficult for an individual to predict whether he or she will be renting in retirement. Although it is clear that more pensioners will own their own homes in future, no one can know for certain what will happen to the housing market. Those who may have thought that their homes and jobs were safe may find that things are very different some years hence.
	In his winding up speech at Second Reading, the Minister did not give us very much information about the Government's review of Pays to Save. He just said that the scheme was not buying people off, that it was there for a proper purpose and that he was sure it would deliver. Perhaps in his reply he could expand on what action the Government will take and in what circumstances when the review is published.

Baroness Turner of Camden: From the very beginning there has been concern on all sides about the interaction of the scheme with the benefits system. Therefore, I support the intentions behind the amendment but, on the other hand, it does not meet the objectives which I think the noble Lord, Lord Skelmersdale, had in mind in introducing it. In particular, I share the views expressed about proposed new subsection (2) of the amendment. I do not see why the implementation of the scheme under Clause 58 should be postponed for at least 12 months, as the subsection says, while consideration is given to the projected figure of 10 per cent referred to in the amendment. That seems a rather unusual figure to quote. In those circumstances, although I am sure that the Committee is concerned to ensure that interaction with the benefits system should be ironed out somehow or another—indeed, we know that the Government have that under continuing review—I cannot support the current wording of the amendment.

Lord McKenzie of Luton: I ask the Committee to reject the amendment and I thank all noble Lords who have contributed to this short but important debate. As the noble Lord, Lord Oakeshott, said, the issue of savings incentives and the interaction with means-tested benefit has enjoyed lengthy and constructive debate in both Houses, and it is clearly an important issue. Perhaps he did not use the word "constructive"; that is my gloss on his presentation.
	I reiterate that under reasonable assumptions the majority of those who enrol can expect to benefit from having saved, and we must not lose sight of that. The noble Lord's amendment would delay introduction of the personal accounts scheme, but seemingly not auto-enrolment generally, if the number who may not benefit was greater than 10 per cent of the total expected pensioner population.
	I hope that we all accept—the noble Baroness, Lady Thomas, touched on this—that no amount of analysis can tell individuals at the point of enrolment exactly how their lives will turn out possibly decades into the future. We know from analysis, for example, that there is around a 10 per cent chance that a 20 year-old man today will not reach state pension age, but no one is suggesting that we should stop advising 20 year-old men to save for their retirement. On this issue, perhaps I may quote the noble Lord, Lord Turner, who said that,
	"if at the end of the year your house has not been burgled, it does not mean that it was bad advice to buy a household insurance that year".
	As I said at the outset, our package of reforms means that most people can expect good outcomes from saving, while those who do not wish to save will be able to opt out. The provisions in the Bill represent the remaining pieces of our pension reform package, and any delay in their introduction would deny many individuals the very real benefits of starting to save early.
	Again, as the noble Lord, Lord Oakeshott, said, we have already published our projections of entitlement to all income-related benefits for the pensioner population until 2050. Around 40 per cent of pensioner households will be entitled to one or more income-related benefits by 2050. As my noble friend Lady Hollis said, there is no prospect of reducing that figure to 10 per cent. Indeed, as I think we have discussed before, if the basic state pension were doubled in 2012, in 2050 25 per cent of pensioners would still be on one or more income-related benefits.
	Through our reforms we are reducing the level of means-testing, not increasing it, because without reform it would have increased to 75 per cent in that period. By 2050, the basic state pension will be worth more than double what it otherwise would have been, ensuring a solid foundation for private saving.
	We could debate, as we have done in the past, what an appropriate level might be for pensioner households on means-tested benefits, but I do not apologise for the need to retain a means-testing system. Such a system protects the most vulnerable individuals against poverty within inevitable cost constraints. However, in this debate we must absolutely not lose sight of the fact that both our analysis and that of the Pensions Policy Institute demonstrate that people can be on benefits in retirement and be better off for having saved. Equating those on income-related benefits with those who will not be better off from savings is simply not right. We need to remember that because of our reforms to the state pension system, someone with a good record of working or caring, including those on low earnings, can expect a state pension of around £150 in 2008-09 earnings' terms by 2050, more than £25 above the pension credit guarantee.
	The interaction between means-testing and savings incentives is not a new issue. There are already safeguards in place to improve incentives to save. In 2003, we introduced the savings credit to prevent a pound-for-pound clawback. People can take up to 25 per cent of their pension pot as a tax-free lump sum and those with less than £16,000 can take 100 per cent of their pension pot. Our analysis shows how these are already working to improve incentives for those who have been suggested as the most vulnerable. Older groups with lower earnings, for example, are most likely to be able to trivially commute their savings, gaining a cash sum. Up to £6,000 of that—a significant amount for many, I suggest—can be held without any impact on any pension credit or housing benefit that they may receive.
	We would have to think carefully before discouraging such people from saving. Indeed, while the challenges around means-tested benefits are clearly an important matter, the PPI has stated that this,
	"does not mean that people should ... be auto-enrolled".
	But, as the PPI has also made clear, this implies that people will need access to clear information. We fully agree with that; indeed, Clause 9 of the Bill recognises the importance of information. We will ensure that every automatically enrolled individual has access to the range of information that they need to understand the process of automatic enrolment, the pension scheme into which they will be enrolled, their expectations for a state pension and the implications for their later life.
	Anyone who does not think that pension saving is for them, regardless of the reason, will be able to opt out. But that should not be allowed to detract from, or hinder, the fact that we are further improving savings incentives through this Bill. Millions of workers, many for the first time, will see their pension contributions matched pound for pound through the employer contribution and tax relief. It is right that we should protect against unpredictable events and provide a safety net for those who need it most and it is right that we should encourage individuals to save and take personal responsibility for their own retirement income, giving them the security and flexibility of their own savings pot.
	Governments always need to strike a balance between alleviating poverty and encouraging savings. They must do so in a way that is both affordable and sustainable. Our reform package achieves that. We agree that this is an important matter, but the Government, external stakeholders and, I thought, all political parties are also agreed that there is no magic bullet and that progress of this Bill need not be delayed. Nigel Waterson MP said:
	"We never thought it was realistic to deal with this during the life of the bill".
	That said, we have listened carefully to the concerns of those in Parliament and outside. Age Concern, Help the Aged and others have asked us to set up a review to look at these issues again and to have an informed debate on the issue. We are now well advanced in that review involving stakeholders and external experts as well as the very best analytical minds and tools at the Department for Work and Pensions. The review will further expand an already extensive evidence base on this issue. It will further improve our understanding of incentives and the impact on behaviour. It will look at how different factors and individual characteristics affect outcomes. Clearly the lessons of this will be vital in developing our information strategy. Importantly, it will assess some of the proposed measures put forward, putting in the public domain an objective assessment of their pros and cons, their costs and the effects on our wider tax and benefit policy.
	In all this, we are mindful of the need to strike the right balance between alleviating poverty and personal responsibility for retirement income. We are also mindful of the cost constraints that we face, but we will consider the evidence of the programme and its full implications. I shall briefly touch on some technical issues relating to the drafting—

Lord Oakeshott of Seagrove Bay: Before the Minister does so, perhaps I could say that I was rather surprised to hear what he said in his first reference to the Pensions Policy Institute. He gave the impression that the PPI—I know that it guards its independence very jealously—was in some way endorsing government policy. Although I do not ask him to read it out again now, has he cleared what he said with the PPI and, if not, could he do so please?

Lord McKenzie of Luton: As it happens, I met the PPI last week; I discussed the programme and the work that it had done and tried to seek its views. The noble Lord is right that it is an independent body, but it was a clear statement; I think that it was in part of the PPI's response to the consultation and in its report, which indicated that the challenges around identifying those at risk should not cause people not to be auto-enrolled. It meant that people needed very good information, and that is where we agree.

Lord Oakeshott of Seagrove Bay: I asked whether the Minister could send the sentence that he used to the PPI and make sure that it is a fair reflection of its views. That is all that I am asking.

Lord McKenzie of Luton: I am happy to do that, but I asked a question when we met and I believe that what I said was a direct quote from the letter that I was sent. However, I will certainly clarify this with the PPI if it helps the noble Lord.
	Let me make clear some of the technical drafting. My noble friend Lady Hollis dealt with people being at risk, which is not defined here. It seems that the noble Lord is equating the numbers on means-tested benefit with those who are at risk. On that basis, the 10 per cent threshold could not be met.
	The amendment would prevent the development of personal accounts, which is not the same as auto-enrolment. It would permit auto-enrolment to proceed on the basis of the noble Lord's formulation but not the development of personal accounts. That cannot be right.
	There are some other technical issues, but I do not want to dwell on those, as we are focused on a more substantive debate today. Let us not forget the big prize here. This package will benefit millions of people. We estimate that in 2050 the reforms will lead to a total increase in annual private pensions income of £11 billion to £16 billion at today's prices. That is a prize worth having.
	I am advised that I read out the PPI quote wrongly, missing out a "not". I will now read it out properly. I said that while this is clearly an important matter, the PPI has previously stated that this,
	"does not mean that people should not be auto-enrolled".
	I thought that that was what I had said but, if not, I am happy to clarify it.
	Even if we were to define and identify accurately an 11 per cent risk group, as the noble Lord wants, there would be justifiable fury if we denied the benefits of auto-enrolment to 89 per cent of people who were not at risk, so that millions of low to medium earners would not get the chance of having what many of us have taken for granted throughout our working life. I hope that, on reflection, the noble Lord will feel able to withdraw the amendment.

Lord Skelmersdale: I had no intention whatever of pressing the amendment. I accept straight away the criticism of the noble Baroness, Lady Hollis. I accept, too, that I went way over the top in drafting the amendment, although I hope that I did not go way over the top in speaking to it. As the noble Baroness, Lady Turner, and noble Lords from the Liberal Benches have said, this is an extremely important subject. There is no doubt in anybody's mind that means-testing is essential to the success of what we all want to see: a significant increase in the number of people saving for their retirement.
	It is inevitable that jobholders will exercise their right to opt out if they feel—and it may not be a particularly sustained feeling—that investing in a personal scheme, especially towards the end of their working life, would so eat into their state benefits, even eliminating them altogether, that they would be no better off than if they had not saved into such a scheme. The advice that they are given, and that we have discussed already, must—simply must—tell them whether it pays for them to save in this way.
	I referred in my opening remarks to the work that the Government are still undertaking on this, which the Minister called a review. This, as I understand it, will be completed during the Summer Recess—I hope that I am right. It is on the basis of those results, or what I can discover about the review if it is still going on, that I will decide whether to come back to this matter at a future stage of the Bill, because I am absolutely convinced that it is essential to the future of the whole scheme. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Tunnicliffe: I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.
	House resumed.

NHS: Next-stage Review

Lord Darzi of Denham: My Lords, with the leave of the House, I will repeat a Statement made by my right honourable friend the Secretary of State for Health in the other place.
	"Mr Speaker, as we celebrate the 60th anniversary of the NHS this week, it is befitting that we should acknowledge its successes, secure its strengths and chart a path for its future. Created by fraternity to take the place of fear, the founding principle of the NHS was as clear as it has been enduring: that access to healthcare should be determined by clinical need rather than by the ability to pay.
	"The NHS has been a friend to millions, sharing their joy and comforting their sorrow. Today, the service sees or treats a million people every 36 hours, nine out of 10 people see their family doctor every year and a million more operations are performed than just 10 years ago.
	"Then, the NHS was suffering from chronic underinvestment. The challenges were too few doctors and nurses, poor equipment and crumbling infrastructure. Patients waited months, if not years, for treatment, waited weeks, not days, to see their GP and measured their time waiting in A&E in days and nights rather than hours. A service whose promise was fair access to all had witnessed patients dying before they could even receive its care.
	"This Government resuscitated the NHS and reaffirmed its principles. Today, patients wait no more than four hours in accident and emergency, and by the end of the year they will be able to go from referral by their GP to treatment, with all the diagnostic tests in between, in no more than 18 weeks and normally in nine.
	"There have been considerable improvements in the quality of care received by patients and delivered by NHS staff. The improvements for cancer and heart disease alone have saved nearly a quarter of a million lives in the past 11 years. The NHS is now able to deliver the highest quality of care in many medical disciplines and settings.
	"The report published today heralds the next stage for the NHS: to deliver the highest quality care for all. It is underpinned by the service's first constitution, which will empower patients by clearly articulating their many rights, bringing transparency to decision-making and securing its founding principles for generations to come.
	"The review has been led by front-line clinicians in every NHS region. Seventy-four local clinical working groups, made up of some 2,000 doctors, nurses and other staff working in health and social care organisations, have developed improved models of care for their communities from maternity and new born to end of life. These are based firmly on the best available clinical evidence and extensive engagement to ensure that they reflect the needs and preferences of local people.
	"In common with all health systems around the globe, the NHS faces some significant challenges: ever higher expectations; greater demand driven by demographics; the transformational power of better information; the changing nature of disease and of treatment; and rising expectations of the health workplace. The report puts the NHS on the front foot, seizing the opportunities that these challenges present, rather than simply reacting to their consequences.
	"Meeting these challenges demands that the NHS does more to help people to stay healthy and gives them more information, choice and control over their own health and healthcare. Every primary care trust will now commission comprehensive well-being and prevention services to meet the specific needs of their local populations.
	"Preventing vascular conditions such as diabetes, stroke and coronary heart disease has the potential to save thousands of lives. Today, about 4.5 million people are afflicted by vascular conditions, accounting for over 170,000 deaths every year. We will launch a new 'Reduce Your Risk' campaign to raise awareness and understanding as a precursor to the national vascular screening programme that will begin next year.
	"Improving the health of individuals and families will become an increasing focus for GPs. We will work with world-leading professionals and patient groups to improve the quality and outcomes framework to develop better incentives for maintaining good health as well as providing good care.
	"As much as the NHS will do more to help people to stay healthy, it will also become a service that responds more rapidly and effectively to the people who use it. Patients will be given more rights and control over their health and care. They will have greater choice of GP practice, with better information to make the best choices for themselves and their families. This will be delivered by a fairer funding system that gives better rewards to GPs who provide responsive, accessible and high-quality services. Choice will not simply be a policy of government but a right secured for all through the first NHS constitution.
	"The constitution will guarantee patients access to NICE-approved drugs and treatments. We will give greater support to NICE to increase the speed of its appraisals process so that new guidance is consistently issued more quickly. Primary care trusts will have a new duty to give transparency to their decisions and clear explanations to the public. These measures proclaim an end to the postcode lottery in NICE-approved drugs and treatments.
	"These rights will be accompanied by more personal control for patients, harnessing their ingenuity to improve their health and care. Every patient with a long-term condition will be offered a personalised care plan, jointly agreed by the patient and a named professional, so that services are organised around the needs of individuals. For the first time, we will pilot personal health budgets that give individuals and families the fullest control over their care.
	"All of the measures announced here today are designed to improve the quality of care that patients receive; it is essential that quality is understood from patients' perspective. They pay regard to experiences as much as effectiveness, with safety as a given. Patients want to be treated in environments that are safe and clean; they want to be shown respect and regard, compassion and kindness. The highest clinical quality can be undermined by letting the simple things slip.
	"We must have an unwavering, unrelenting, unprecedented focus on quality. Our approach will be dedicated and disciplined, putting quality at the heart of everything that the NHS does.
	"We will begin by bringing clarity to quality, ending the daunting and frustrating confusion that is caused by the morass of standards. NICE will be transformed to select the best available standards, fill the gaps and establish a new NHS evidence service that will ensure that best practice readily flows to the front line.
	"We can be sure to improve only what we can measure; information can unlock local innovation by showing clinical teams where their greatest opportunities lie. We will create a national quality framework, so that every provider of NHS services systematically measures, analyses and improves its performance. Front-line teams will be supported by a new set of graphically illustrated quality measures, known as clinical dashboards, informing the daily decisions that lead to improvement.
	"The power of information will be provided to the public. We will legislate so that all providers of NHS services will be required by law to publish quality accounts just as they publish financial accounts. These will detail the quality of care that they provide for each and every service. Easy-to-understand comparative information will be made available online.
	"For the first time, improvements to quality will be recognised and rewarded. Patients' own assessments of the success of their treatment and the quality of their experiences will have a direct impact on payments. We will harness the expertise and experience of clinicians to raise standards by ensuring strong clinical involvement at every level of the NHS. New medical directors will be appointed to join existing nursing directors in every NHS region. They will be supported by clinical advisory groups to sustain and support the strong clinical voice elevated through the review.
	"Nationally, a new quality board will be formed to provide leadership, to give advice to Ministers on top clinical priorities for standard setting and to make an annual report on the state of quality in England compared to international peers. There will be strong safeguards for quality, with no hiding place for those who fail to get the basics right on issues such as infection. I have already announced that the Care Quality Commission will have tough new enforcement powers to tackle infections and other lapses in patient care.
	"Finally, we know that healthcare works at the edge of science, constantly creating new ways to cure and care for patients. The NHS has long been a pioneer, but too often too few NHS patients have benefited. We will create an environment where excellence and innovation can flourish. That is why this report heralds new partnerships between the NHS, universities and industry to achieve the very best care for patients. This ambitious agenda to improve quality for patients can succeed only by unlocking the talents of the front line. We will ensure that NHS staff have the freedom to focus on quality, empowering them to improve services.
	"Clinicians have abilities that go beyond their clinical practice alone. Our new expectations of professionalism redefine their roles as practitioners, partners and leaders in and of the NHS. We will unlock their creativity and innovation, give greater responsibility for stewardship of resources and proclaim a new obligation to lead change where the evidence shows that it will improve quality.
	"These noble objectives will be supported by pragmatic action. Our journey of setting the front line free from central direction will continue. Our commitment to foundation trusts remains strong and we will extend similar freedoms to community services. We will free up their talents by introducing a 'right to request' to set up a social enterprise. All primary care trusts will have an obligation to consider these requests, and staff choosing to join such organisations and continuing to care for NHS patients will be able to retain their pensions.
	"With greater freedom will come a newly enhanced accountability. The report sets no new targets. Our approach will be openness on the quality of outcomes achieved for patients, meaning accountability for the whole patient pathway from beginning to end. NHS staff are the service's most precious asset. We will more clearly illuminate how highly we value them by making new pledges to all staff on the constitution, on work and well-being, on learning and development and on involvement and partnership. All NHS organisations will have a statutory duty to have regard to the constitution.
	"Furthermore, the system for education and training will be reformed by working in partnership with the professions. We will open a new chapter in our relationship with the medical profession by establishing Medical Education England. We will increase our investment in nurse preceptorships threefold so that newly qualified nurses will be given more time to learn from their senior colleagues. We will pay a higher regard to the contribution of non-clinical staff—the porters, administrators and others who are the backbone of the service—by doubling our investment in apprenticeships and we will strengthen arrangements for learning and development so that all staff have access to the opportunities that they need to update and enhance their skills. Following today's publication of the final NHS next-stage reviewreport, we will, over the course of this week, be publishing supporting documents setting out in more detail our conclusions for primary and community care, for workforce and for informatics.
	"Let me turn to the first NHS constitution. The changes outlined by the review will improve quality, but the best of the NHS—its enduring principles and values, its defining rights and responsibilities—must be protected for generations to come. Patients and the public should be empowered by the clear expression of their rights in relation to the NHS and the value of staff should be fully recognised. Decision-making should be transparent and accountability strengthened. It is right and proper that a national health service funded by national taxation should remain accountable in and to Parliament. These goals are accomplished by our draft constitution, which we will publish for consultation today.
	"Our proposal is to legislate so that all NHS bodies and independent and third sector providers of NHS services must take account of the constitution in their decisions and in their actions. The Government will be required to renew the constitution every 10 years, involving the patients who use it, the public who fund it and the staff who work in it. No Government will be able to erode or undo the fundamental basis of the NHS without the consent of the people's elected representatives. Safe in the knowledge that the best of the NHS shall not perish, we will pursue our ambition to deliver the highest quality care to all, not in some respects, not in many respects, but in all respects. On its 60th anniversary, after a decade of investment, the NHS has the most talented array of staff in its history, united in their ambition. High quality care for all is now within our reach. The report charts a path towards its achievement and I commend it to the House".
	My Lords, that concludes the Statement.

Earl Howe: My Lords, on behalf of these Benches perhaps I may first express my thanks to the noble Lord, Lord Darzi, for having repeated this important Statement to the House. I confess that it is a slight surprise to me that, as the Minister commissioned to carry out the next-stage review and to bear prime responsibility for it, he should be repeating the Statement rather than making it on his own account. I am sure I cannot be alone in attaching some significance to that. What we all hoped would emerge above all from this exercise is the noble Lord's own vision for the future delivery of healthcare in England with the benefit of sound advice from the professions and after the freest possible consultation. We did not want the noble Lord to be in any way hijacked. The fact that the Secretary of State should have appropriated today's announcement to himself could be indicative of what some of us feared when we read Mr Johnson's comment in the Guardian earlier this year when he said that he regarded the noble Lord as a tethered goat. The noble Lord deserved better than that. But it is one reason why I suggest to the House that we need to examine this review for evidence of what one might term unwanted departmental influence.
	The report which the noble Lord has summarised for us today has been long awaited and will doubtless be pored over in the weeks to come by all with an interest in it. I have not yet had an opportunity to read it, and for that reason it is not possible for me to pass any detailed comment. However, there are surely two tests that the report needs to pass if it is to command acceptance and approval. We need to see that the benefits to patients that it trumpets are genuine and evidence based, and we need to see that its recommendations are achievable, given the inevitable constraints of funding, premises and the numbers of medical and other professionals on the ground.
	The noble Lord spoke of this Government having resuscitated the NHS. I should like to think that if he had given this Statement himself, he would not have said that. After 11 years of a Labour Government, he will know that the backdrop to this report is a picture of health outcomes of which this country cannot be proud. For all the additional money poured into the NHS over the last few years, we still have cancer survival rates that are below the European average, high mortality rates from heart disease and stroke, and mortality rates from lung disease that are little short of abysmal. It is therefore strange that we should now suddenly be talking about needing to put quality at the heart of NHS care. The noble Lord spoke of the quality and outcomes framework, but we have seen this year how the QOF was all but neutered by politically driven objectives at the expense of the well considered recommendations of the expert group.
	The noble Lord has spoken of putting patients' wishes first and giving doctors and nurses clinical autonomy. I hope he will forgive me if I say that this line has a familiar ring to it: we have heard it before. He says that change will not be driven by top-down targets. But if that is so, what is to become of the targets that are now in place and that Ministers have so consistently defended? It is no secret that I believe government targets to have had a damaging effect on professional autonomy and morale, and a distorting effect on clinical priorities. They also treat patients as passive recipients of care rather than as empowered individuals. Unless most of these targets can be ditched—and we have not heard that they will be—the noble Lord is unable to say, with any confidence at all, that he is restoring clinical autonomy to the professions.
	I welcome the idea of having indicators of quality and patient satisfaction—we have advocated those—but what has become of practice-based commissioning? How do the Government view the role of foundation trusts in the future? What is to happen to payment by results and how is the tariff system to be improved and unbundled so as to remove the barriers to delivering properly costed treatments? These mechanisms were meant to be the engines for improving the quality of care in the health services, but we have heard nothing about them.
	The new performance regime published four weeks ago gives strategic health authorities the power to control their areas. That did not have the ring about it of the kind of local autonomy that the noble Lord has spoken of. In his review of the east of England, the noble Lord proposed,
	"21 new bodies set up at a regional level".
	Can he look us in the eye and say that this is a locally driven decision? If that kind of approach is to be adopted up and down the country, can he assure us that the risks of establishing further bureaucracy will be avoided?
	The Minister has spoken of removing the postcode lottery for medicines. With respect to him, we have heard this innumerable times before. Of course we will support any moves towards greater transparency of decision-making by PCTs—I proposed an amendment to the Health and Social Care Bill last week on exactly that point—but this country is still amongst the slowest to take up new medicines. If local availability of medicines has in the past been constrained by insufficient funding, how can the noble Lord suddenly be so confident that the postcode lottery will be made a thing of the past?
	The noble Lord will know the worry that exists about maternity services. The Government say that they are in favour of home births, yet in recent months 15 maternity units have been closed or have lost their obstetric service and 26 more are under threat. If obstetric services are located more remotely than they were before, how can mothers-to- be safely opt for home births? What undertakings can the noble Lord give that his proposals will not lead to super-sizing of maternity units when the evidence shows that the performance of smaller maternity units is, on average, higher than that of larger ones? Here again, the noble Lord speaks of listening to local opinion, but the whole drift of recent announcements and reorganisations has been towards greater centralisation of NHS services.
	When the Minister announced the results of his review of the NHS in London, he famously declared that,
	"the days of the district general hospital are over".
	Would he like to take this opportunity to expand on that statement in the context of this review? What are the implications of today's report for the centralisation of GP services in so-called polyclinics? We did not hear that magic word mentioned in the Statement, but the idea, surely, cannot have been abandoned. I have no objection to polyclinics; what I object to is their imposition on communities without consultation. What is the noble Lord's view of the place of the community hospital in delivering non-acute care in the community? We have not heard anything that gives us even a flavour of how he believes services, both acute and non-acute, should ideally be reconfigured. The Statement is long on generalities but short on specifics.
	The Statement referred to workforce planning, but what answers do the Government have to Sir John Tooke's review? The MMC implementation represented a monumental blow to medical morale and there is apparently no end in sight to the pressures which gave rise to that debacle. What is the Minister's proposal for resolving that aspect of workforce planning?
	Last year the noble Lord, Lord Darzi, accepted an immense challenge when he agreed to undertake the next-stage review. Whether or not every detail of his report commands agreement among parliamentarians, he has fulfilled that challenge—and on that, he deserves our congratulations. He also deserves to have more time with his patients, which I hope he will allow himself to have. We wish him well.
	The Minister knows, or should do, that my party does not indulge in opposition simply for the sake of it. We will support him and the Government whenever we think that proposals for the NHS are right and in the interests of patients. As we celebrate the diamond jubilee of the NHS, our reaction to this report is no exception to that principle. Nevertheless, the Minister's real success or failure will be judged not by what is on the printed page of this report but by the improvement of the health and well-being of the population and the quality of care that patients receive over the years ahead.

Baroness Barker: My Lords, I, too congratulate the noble Lord, Lord Darzi, on, I think I am right in saying, the first Statement he has ever given to this House and on the completion of a major piece of research. After what must seem like an interminable gestation, he has seen it successfully launched. It is an important report, a review on which, to a great extent, the hopes of patients and the NHS workforce depend.
	Sixty years ago that great liberal, Beveridge, brought to fruition his vision for a health service fit for a nation going through great transitions after the War. When the noble Lord's review was announced, one particular element within the very long terms of reference caught my eye. He set himself the task of working out how a publicly funded, comprehensive, affordable, high quality health service could be delivered on the basis of need, not the ability to pay. It is that laudable aim that we on these Benches support, and it is that criterion against which all other parts of the report have to be judged.
	Like the noble Earl, Lord Howe, I have only just received a copy of the report and am not in a position to comment on it in any great detail. As the report has been heavily trailed in the press this week, however, I want to start by dealing with one issue. Ever since 1948 the NHS has been subject to review after review, all of which have attempted to do the same thing: to reconfigure staff resources and patients in order to achieve better health outcomes and to reduce health inequalities. Practically all those reviews have, in the end, come down to one of two things: either a restructuring of the management of the service or a focus on buildings. Coming as he does from a clinical background, and with the support of clinicians across the piece, I hope that the Minister will be able to avoid the trap in which healthcare is essentially evaluated on the basis of buildings.
	I notice that he did not talk about polyclinics in his Statement. We on these Benches will also support them only when they are the result of local decision-making by people in areas who have the clinical and resource data to come to the conclusion that the development of a polyclinic will change for the better the health outcomes of their area.
	NICE is one of the achievements of which this Government should be most proud. It is one of the most essential parts of any health service. The independence and authority of NICE should never be undermined. I hope that it will be given the resources necessary to implement the speedier approval process, while ensuring that nothing is done to compromise the levels of our research into pharmaceuticals and new medical technologies. I hope also that, whatever decision this House arrives at on co-payments, nothing will be done to compromise the integrity of diagnostic and treatment processes, so that everybody in the country will continue to have access to the highest standards of clinical judgment.
	I was interested to see in the report the proposal for an NHS evidence service. We will wish to look at that in greater detail, but if it builds on the system of national service frameworks which we have had for the past 10 years, where best practice is brought together with new knowledge, and provided that it is backed up by sufficient resources, it will be an important development.
	The Minister spoke about innovation and the need for us to use the NHS as power to innovate. He then spoke about staff being enabled to set up social enterprises. I am not sure that I agree with those two things going together. The NHS has been responsible in its time for some of the most marvellous innovations. Embryology, for example, has been taken forward in this country unlike in any other. I hope that the Minister in his proposals is not opening the door to increased private provision within the NHS.
	I could not help but notice that there was no mention of mental health in the Minister's Statement, nor was there much mention of long-term conditions or community care; the focus was very much on an acute care system. If noble Lords have any doubt about that, I suggest they look at the photographs in the report, all of which bar one come from acute hospitals. We will not be able to judge the Minister's proposals in full until we have seen the proposals for primary and community care. That point was made extensively in the report by Sir Derek Wanless in 2002, and we should not ignore it.
	The one other question to arise from the Minister's Statement was money. How will the implementation of the review be funded? To what extent will its implementation be dependent on the sale of NHS property and land?
	We welcome an NHS constitution in so far as it brings about concrete guarantees that nobody in this country will in the foreseeable future suffer health poverty. One of the most telling passages of the report on London of the noble Lord, Lord Darzi, was that in which he charted life expectancy at different stages along a Tube line. In so far as the report brings about greater health equality and reduces health poverty, it will have our support.

Lord Darzi of Denham: My Lords, I am grateful to the noble Earl, Lord Howe, and the noble Baroness, Lady Barker, for their response to my Statement. I have been here for 12 months and constantly learn about protocols and rules. I have been told very firmly that there are strict protocols for Statements being made in the Commons first. The House may wish to change the rules. On this occasion, though, I reassure the noble Earl that I have led this piece of work with a team of Ministers, including my right honourable friend the Secretary of State, to whom I am very grateful for giving me all the space. It is not only me; it is important to highlight that this is not the "Darzi report" but the report of 2,000 doctors and nurses across the country, who have led this review at a local level, based on evidence and in partnership with patients and the public as a whole.
	The noble Earl raised a number of important questions and issues. First, on quality, why now? As a clinician who works in the health service, I do not want to sound political, but if I take myself back to the day on which I was appointed in 1994, I can remember arriving at St Mary's Hospital, where I was the only clinician with an interest in bowel surgery. Now I am a member of a team of four other surgeons, two nurse practitioners, one nurse consultant and two stoma nurses. It is important to remember the state of the health service back in those days and where we are at the moment.
	You cannot aspire to achieve quality if you do not have the infrastructure. You cannot aspire to achieve quality without an adequate number of doctors and nurses or without the right environment in which to work. This is our opportunity to refocus what the NHS is all about. What energises me in coming to work every day is to improve the quality of care. What patients want when they see me in my clinics on a Friday or a Saturday, at the most vulnerable time in their lives, during sickness, is better-quality care. Earlier I said that quality was not just about the clinical outcomes that clinicians such as me will have an interest in; it is also to do with patient experience. Being here for 12 months, I have had the constant reminder from noble Lords in this House about issues relating to nutrition, respect and dignity. Those are simple factors that are very close to patients, and we need to have a high regard to them in future.
	The quality framework that I described is very detailed. We have never had anything like it before. I strongly believe that it is how we will provide the clinicians with the power that they need in improving what matters most—the quality of care. The noble Earl touched on the issue of morbidity and mortality. We have dramatically improved our outcomes and there is clear evidence of that. A recent publication by Sheila Leatherman in her joint publication with the Nuffield Trust clearly highlights this. Mortality following myocardial infarct in this country has dropped by about 42 per cent, which is the highest drop that any country in the world has seen. But I agree with the noble Earl that we can do better. It is not uniform—and the whole purpose of this report is to help clinicians at a local level.
	I could not agree more on the question of targets. That is why I made an explicit statement that there will be no more targets. But let us remind ourselves that targets met the aspirations of the patients who used the service. When you double the investment in the health service, you have to have compliance measures in which you can reassure the taxpayer who is funding the system but, more importantly, the users of the service. Let us again remind ourselves that, on the day when I was appointed in 1994, there was no such thing as standards in the NHS. It was a free for all. I decided which patients came in; patients would wait for 18 months and longer and would sleep overnight on trolleys in A&E departments. We had to have targets and hold the provider end of the NHS accountable for the money that it received in relation to patient care. So the targets will become minimum standards—and, as I said in my report, there are no new targets in that report.
	It is important to realise that quality can be improved only at a local level. I have been here for 12 months on a part-time basis, and I reassure the House that no one in Whitehall alone can decide how to improve quality at a local level, or help to do so. Quality needs engagement of staff at a local level, and that is what the report has done. The spirit of the review over the past 12 months has been all about empowering clinicians locally to design models of care based on patient pathways, starting from birth and finishing off with end of life.
	I am sure that, once the noble Earl reads the report, he will appreciate that all sorts of other policy themes will address the many good questions put to me about, for example, more foundation trusts—on which I could not agree more. We will be working with Monitor and others to both reinforce what we have been doing over the past 10 years and to have more providers obtaining foundation status. We are also extending that to the community services. This Government introduced the NHS tariff, and we will be working further on it by introducing a normative tariff, paying for the highest quality of care.
	There is a lot in the document about practice-based commissioning, and how we free up staff at a primary community level using the practice-based commissioning escalator. On the postcode lottery, we are attempting to expedite the approval of NICE drugs, which now takes on average 18 months to two years and will in future take between three and six months. In addition, the noble Earl refereed to our more transparent process, in which PCTs could still approve the use of drugs which have not yet received NICE approval.
	I turn to maternity services; the noble Baroness, Lady Barker, also raised mental health and long-term conditions. There are 10 regional reports, each of which has a pathway on maternity services, mental health and long-term conditions. I would be delighted to send the noble Baroness copies, because they highlight local aspirations of how these services should be reported. The noble Earl also raised the future of maternity services. The best people to decide the future of maternity services are local clinicians working on the front line, in consultation with the public and patients. In the future, no one in Whitehall should be in any way involved in this decision making. That has been the Government's policy over the past couple of years, and it will be our policy in the coming decade.
	I have not mentioned my favourite word: polyclinics. "Polyclinic" was a description of primary community services in London. I was fortunate and privileged enough to work with many clinicians in London. When I did that report, I was a clinician working in London; it was a response to the aspirations of Londoners with regard to improving primary and community services. Since joining your Lordships' House, it has become clear to me that decisions on the implementation of polyclinics are a local issue. Noble Lords are aware that local consultations with Londoners were carried out for six months. We have made no announcements on further investment in primary and community strategy since the interim report published in October, highlighting 115 new health centres, which we have debated in this House on many occasions. We must increase capacity in primary and community services to meet challenges facing the health service now and in the future.
	I remind your Lordships that the life expectancy of a person living in Manchester could be 10 years shorter than the life expectancy of someone living in some parts of London. We must invest more in primary and community strategy because primary and community services have the biggest impact on survival rates and the health of the nation. We also want patients to have more choice in them.
	Workforce education and training is another significant area that we have debated in this House. I remember our debate on modernising medical careers, and the dilemmas we have had following the introduction of MMC. I reassure the House and the noble Earl that I have been working with not just the profession and its leaders but with John Tooke himself in designing the workforce planning and education. The relevant document was published today and contains a letter from him, which warmly received the contributions that the next stage review has made, including the creation of Medical Education England.
	More importantly, I was asked in the House about the need for greater transparency with regard to funding arrangements. I am delighted to tell the House that we are introducing a tariff system whereby the money will follow a trainee. That is in addition to the other announcements that I made.
	The noble Baroness, Lady Barker, asked about innovation. There will be innovation funds at a local level, which is very different from social enterprise. Social enterprise is one way in which staff could be freed up in the future to enhance community services, but we have innovation funds to the tune of £100 million, which clinicians and others will be able to access to make innovation part of everyday working life.

The Lord Bishop of Chichester: My Lords, as a relative newcomer to the House, I apologise if I have not followed the protocol for intervening in discussion on a Statement. Like many of your Lordships, I was a "baby-boomer" born after the Second World War and have lived through this incredible period of unprecedented and unparalleled healthcare, which is one of the marks of a truly civilised society. Like many people in their sixties, I feel the need for something of a retread. Therefore, I entirely welcome the review and am very grateful for what has been reported to us of it. I have only just received it and have not had a chance to read it in detail. However, I wish to raise two concerns about the Statement and the Minister's comments.
	First, I welcome the Minister's comments on nutrition, respect and dignity and the references to wider health teams in the context of the promotion of health. The church and members of all faith communities in this country will welcome the reference to wider health teams but will regret the lack of an explicit mention of chaplaincy as part of that. Physical and mental health can be seen only in the context of the wider human and social health of individuals, everything that goes to make up spiritual health. I hope that the next next stage will contain much more explicit recognition of the need to make statutory provision for chaplaincy and not treat it just as a bolt-on or occasional or optional extra.
	Secondly, I appreciate the Minister's reference to bringing down levels of morbidity and mortality. However, the ability to remove death altogether has escaped this Government, and, I suspect will escape all Governments. Death remains the end of life. I appreciate very much the several occasions on which the noble Lord referred to patient pathways from the beginning to the end of life. However, if I am not mistaken, hitherto the one area in which the National Health Service has not been required to demonstrate achievable outcomes in terms of patient experience is the end of life. It seems to me that the way in which we honour and try to set standards for palliative and terminal care is hugely important, and that that should at least be commensurate with what we do throughout people's lives. The hospice movement is one of the glories—albeit all too often it is rather marginalised from the National Health Service—of our health provision, and needs our support desperately. I hope that further attention can be given to that matter.
	I have had a chance to look briefly at the report. Paragraph 70 refers to the need for a service that,
	"not only 'adds years to life', but also 'adds life to years'".
	That adequately covers both my points.

Lord Darzi of Denham: My Lords, I am grateful to the right reverend Prelate for the points that he raised. As regards long-term conditions, I am grateful for the support for our plans to meet the challenges of the future. As I said, one of the great successes of the NHS is converting acute illnesses into long-term conditions. Therefore, we are living longer and we need to have a strategy to deal not only with the ageing population but patients with long-term conditions. I could not agree more with the comments about chaplaincies. That is the subject of the social care Green Paper. I recognise the major role that chaplaincies play in the provision of health and social care. I repeat that the 10 regions discussed an end-of-life pathway. The thematic conclusion was that care needs to be more integrated in that pathway. It is probably the one pathway that we will all go through, and health and social care need to be co-ordinated around the needs of patients, and more importantly of their families, to ensure that patients die in their home environment with their family and loved ones.

Baroness Finlay of Llandaff: My Lords, I welcome the Minister's report today and congratulate him on having reinvigorated positive attitudes to and respect for patients throughout the NHS. Will he explain how the new bodies, NHS Medical Education England and the NHS evidence service, both of which I warmly welcome, will ensure that patients understand the importance of research as a way of providing an increased information database so that they can take sound decisions about purchasing drugs and so on in the future, and so that they understand that researchers are benefiting care and patients are not guinea pigs for the NHS? Does the noble Lord intend to do anything to decrease bureaucracy for those undertaking research evaluation projects?

Lord Darzi of Denham: My Lords, I am grateful to the noble Baroness for her question. I am delighted that NHS Medical Education England and the NHS evidence service have been welcomed. We have a lot to say about research in the constitution: what the patients' responsibilities are in regard to it and how important it is. As I said earlier, we need to exploit some of the innovations that we have seen in the NHS and, more importantly, to see how we can translate our excellence in science and technology in this country to the benefit of patient care.

Lord Patel: My Lords, I too thank the Minister for repeating the Statement. Everyone knows that it is his report, and we do not need to worry about where it was spoken about first. When the papers referred to a tethered goat, his name was not mentioned. However, I assure him that we all know that he is not a goat. I have known him for years, and I know that you cannot tether Ara Darzi.
	I welcome the report's emphasis on quality and standards. However, I have many questions, and an appropriate time should be allocated for a long debate on the report rather than the one hour that we will get today. A quality board will be established, with top priorities for standard-setting. NICE will be asked to produced standards, but it is not clear whether it will set clinical standards. The priorities identified for the quality board, and therefore for Ministers, will be care standards. There are differences between the two, which I know the Minister understands. Although I welcome the establishment of clinical dashboards, they are good for improving clinical care only if the deficiencies identified are met with the necessary resources. Will the Minister say whether they will be?
	Lastly, how will the universities be involved in improving the quality of care? I welcome that suggestion.

Lord Darzi of Denham: My Lords, I am grateful to the noble Lord for his points. I shall be brief. First, the National Quality Board will advise NICE on setting standards, which include both minimum standards and clinical standards. We are well aware that NICE works with professional bodies to set clinical standards, but it will have an additional role in kite-marking some of the standards that professional bodies, such as royal colleges, already have.
	On the dashboards, we will provide the tools by which we will measure how we empower patients. I referred to measurements by which we will empower patients. Measurements are also extremely important in allowing clinicians like us to improve services. These are dynamic measurements, and we will provide the tools and the clinical team to make this happen.
	I believe, for several reasons, one of which being that I work at a university, that the university leadership could be exploited to improve patient care. The universities will have two roles to play. First, they will be part of health innovation and education clusters, providing leadership in education and training. Secondly, they will have a leadership role in innovation in health and social care.

Lord Roberts of Llandudno: My Lords, since the National Health Service was established, there have been changes in the devolved nature of the Administrations. Although these are welcomed, what arrangements are there for this new, next stage of reform for England to be made known to and possibly introduced in Wales? We do not want to miss out. Would Scotland also be included?
	Secondly, for generations, people with neurological diseases and so on in north and mid-Wales have gone to Liverpool; they have crossed the border. Now there is some introduction of a scheme whereby people from north Wales travel not for an hour to Liverpool but for five hours to Cardiff or Swansea. Also, people from mid-Wales go to the Shrewsbury hospitals. What guidelines will the Minister have for those cross-border issues raised, as well as the devolved issues?

Lord Darzi of Denham: My Lords, I thought that my brief was big, but I never thought that I would be dealing with a devolved Administration. However, I reassure the noble Lord that, since the publication of the report, the department has talked to the devolved Administration to answer at least some of the questions raised—most importantly those about cross-border issues, but also those about workforce planning, education and training. We train and educate doctors and nurses in this country within the five regions, and it is important that we have a strategy in which we bring England, Wales, Scotland and Northern Ireland together in deciding some of the major themes. The devolved Administration are looking into that.

Baroness Carnegy of Lour: My Lords—

Lord Brooke of Alverthorpe: My Lords, it is this side, I believe.

Baroness Thornton: My Lords, there is time for both.

Baroness Carnegy of Lour: My Lords, in relation to what the Minister just said about talking to the devolved Administrations, is the constitution that we are told about in the report one for the National Health Service of the United Kingdom or one for that in England? It talks about empowering patients. Patients do not need empowering; they need treatment, understanding and respect. What exactly is the constitution and who is it for?

Lord Darzi of Denham: My Lords, the constitution is for the NHS in England, not the NHS elsewhere. However, as I said earlier, we are talking to our colleagues in Wales and Scotland in relation to it. The content of the constitution is out for consultation today, for 14 weeks. I would be grateful if the noble Baroness contributed to that consultation.

Lord Brooke of Alverthorpe: My Lords, I join others in congratulating the Minister on producing a magnificent manifesto, in a sense, for the health service for the next decade.
	My first question is on the further information that will be made available for us. I would like to be assured that targets will not disappear completely. As one who uses the National Health Service and does not have private medical insurance so that I can go through the service quickly, I worry greatly that we may slip back to waiting longer for treatment, as we did in the past. It is 10 years since I had cancer, and I knew many people who died then because they did not get treatment as quickly as they should have done. Their cancers moved into different parts of the body; had they had early treatment, they would have avoided those illnesses and subsequent death. I would like some clearer statements from the Government on where we stand on targets because, notwithstanding what is alleged politically about targets, many people feel that they have delivered a great deal and would be reluctant to see them disappear without the knowledge that there will not be any backward movement to longer waiting for different types of treatment.
	According to the Daily Telegraph, 1.25 million people have signed up to oppose changes in GP practices. Is the Minister aware from his researches that many people around the country are unhappy with services from their GP practices in a number of respects? He said that there would be better rewards; we are all aware that there have been substantial improvements in the rewards given to GPs in recent years. As part of this openness and greater information and to ensure that we are getting improvements in GP services, will he commit himself and the department to make public at each level the salaries paid to all GPs around the country?

Lord Darzi of Denham: My Lords, I want to reassure my noble friend that minimum standards, which we previously described as targets, will remain, including not only the four-hour wait in A&E but the 18 weeks. Interestingly, many of the regional reports have challenged themselves to further reduce these targets below four hours and 18 weeks. Many services across the country provide services within nine weeks, and the south-west region has a two-hour A&E target rather than four. However, the national standard is four. Information on GP practices will be available. All service providers, whether of acute or primary care, will have to publish the quality measures and, more importantly, information on patient experience and outcomes.
	I think that information on salaries is already in the public domain. I am sure that my noble friend is aware that my salary is published as are those of many of my GP colleagues.

Lord Stoddart of Swindon: My Lords—

Baroness Meacher: My Lords—

Baroness Thornton: My Lords, there is time for everyone to join in. Perhaps we can take the Cross Benches first.

Baroness Meacher: My Lords, I add my considerable gratitude to the Minister for his report, which has very many strong features. He mentioned the mental health pathways in the regional reports. Is there anything in his national review about the need to give greater priority to the quality of service and level of safety in psychiatric in-patient units? If there is no such emphasis on a priority in this area, we will continue to have wards where patients and staff are living and working at risk.

Lord Darzi of Denham: My Lords, the 10 regional reports address the mental health pathways in 10 different regions. In some, they have addressed the issue and certainly challenged themselves on safety. I really want to stress that it is an enabling report. It is not a report that I have designed in Whitehall; it is one that I have built on in consultation with 2,000 clinicians across the country about the tools they need to make this happen.
	Safety is a feature of the report, and we are introducing two schemes. The first is "never events", which will be introduced next year and within which we believe the NHS will not tolerate certain things. The type of events covered still need to be decided. The second is the national patient safety campaign, which covers areas of catheter infection. At a local level, clinicians have challenged themselves under the mental health pathways in addressing safety issues in high-security mental health environments.

Lord Stoddart of Swindon: My Lords, like other noble Lords, I welcome the Statement and the report. The report is a good one and will tackle many of the problems. I had a particular note about the paragraph on page 4 that states:
	"Patients want to be treated in environments that are safe and clean; to be shown respect and regard, compassion and kindness. The highest clinical quality can be undermined by letting the simple things slip".
	The noble Lord may recall that earlier this year I raised with him the question of mixed-sex wards and asked him when they would be phased out, as was promised. He said that the task was impossible at that time. Was the matter given further attention in this review? Can we expect to have a change in government policy that will phase out mixed-sex wards?

Lord Darzi of Denham: My Lords, in the debate that we had then, when the confusion was all about definitions and terminology, I was referring to mixed-sex accommodation. This Government are committed to ensuring the provision of single-sex accommodation and single-sex bays. That will be one of the parameters that we measure as part of patient experience.

Lord Kirkwood of Kirkhope: My Lords, does the noble Lord accept that quality at a local level depends on the context of the local level? One thing that the founding fathers of the NHS would be surprised at today is the disparity of provision in some of our most deprived communities, which suffer from financial, social and health inequalities. Can anything in his report give the House some succour by suggesting that future targeting in these areas will efficiently tackle some of the deprivation?

Lord Darzi of Denham: My Lords, I am grateful for the noble Lord's intervention. My report addresses the inequalities that exist in health and healthcare, and the interim report also says that we need nationally targeted campaigns to deal with some of those inequalities. The noble Lord will be aware that the October report referred not only to health centres but to the fact that we are investing £100 million in the creation of new primary care centres in areas where inequalities are most challenging.

Pensions Bill

House again in Committee.

Lord Skelmersdale: moved Amendment No. 89B:
	After Clause 29, insert the following new Clause—
	"Report on auto-enrolment
	The Secretary of State must publish and lay before both Houses of Parliament a report annually on the impact of auto-enrolment on—
	(a) the take-up of;(b) persistency in; and(c) contributions to
	qualifying pension schemes."

Lord Skelmersdale: As with my previous amendment, this one also addresses another of the major issues that will decide the final success of the policy behind the Bill. Indeed, it would seem to address the most important one of all. As with means-testing, the issues of take-up and persistency are obviously at the forefront of the minds of stakeholders and Parliament. They have been raised many times by several of the employer and business organisations and have already cropped up in several of our debates, particularly when we have discussed the potential administrative costs and burdens that auto-enrolment in qualifying schemes will impose on employers.
	The figures from the multitude of reports have been quite varied. Naturally, the Government are sticking by the most optimistic result—that of little or no levelling down and a large upswing in the size of pension saving from the target population of low to medium earners. Unfortunately, this rosy view is not shared by everyone, and the possibility that the qualifying test will drive many employers into personal accounts must be considered and, if possible, protected against. My noble friend Lady Noakes referred to that last week in the debate on Amendment No. 60A. In response, I noted that the Minister said:
	"What matters is that the amount that goes into the scheme at least equals what would go into the scheme if the 8 per cent of the band on the definition of earnings"—
	that is, basic earnings—
	"that is adopted were applied. We are not asking for that to be adopted in every scheme, simply that the contribution that goes into the scheme under the existing scheme's rules produces at least that outcome".—[Official Report, 23/6/08; col. 1300.]
	I understand that but stakeholders still believe that the qualifying test will impose a burden on employers and, in many cases, will lead to their current schemes needing quite serious changes in order to qualify for auto-enrolment. To put it another way, it will not matter whether an employer's scheme is calculated by reference to basic or gross pay as long as the total money going into the pension scheme is at least as much as it would be under the new personal account arrangements, which of course is 8 per cent.
	If stakeholders have misunderstood the import of the Minister's remark, the size of this burden rests largely on details that the Minister cannot yet tell us about. My amendment therefore does not seek to amend these later crucial decisions but, instead, to keep the issue alive and to ensure that research and the education of stakeholders, which I believe is vital, continue so as properly to inform and communicate those decisions. I beg to move.

Lord Oakeshott of Seagrove Bay: We on these Benches broadly support the amendment. The noble Lord is certainly right to say that this is one of the most important issues, if not the most important one, that arise from the Bill. Clearly, none of us can know at this stage what the effect of personal accounts will be and whether auto-enrolment will undermine existing schemes. It is very hard to disentangle that possible effect from the continuing decline of saving in pension schemes anyway. My only reservation is whether once a year is almost too much of a running commentary on matters which take a little time to become clear and whether every two or three years might be better.

Lord McKenzie of Luton: The amendment would require the Secretary of State to report annually on the impact of auto-enrolment; on the take-up of qualifying pension provision; and on the length of time members remain in pension schemes, as well as contribution levels in qualifying schemes. Both noble Lords who have spoken have focused on the importance of seeking to guard against levelling down. We want to do everything that we can to preserve existing good quality provision. I believe that the noble Lord quoted me correctly as regards looking at the qualifying standard: it is the amount of money that goes in; it does not have to be calculated on the same basis as the definition of earnings in the Bill, or the band of earnings.
	I am glad that the noble Lord has tabled this amendment because it provides me with an opportunity to outline our plans for monitoring and evaluating the impact of the reforms, which is very important. We are developing an evidence and data strategy to ensure that appropriate evidence is gathered on the pensions' landscape to enable monitoring and evaluation of the Government's pension reforms. We have already started to engage with key stakeholders through a series of seminars on the current evidence base for pensions. We will publish a report of our work later this year and we plan to continue this dialogue with key stakeholders.
	The Government already conduct regular surveys of the pensions' landscape at the industry, employer, and individual levels, including the Annual Survey of Hours and Earnings, which is an Office for National Statistics survey; the Employers' Pension Provision Survey, a biennial DWP survey of employers; and the Occupational Pension Schemes Survey, an ONS survey of pension schemes, conducted each year. We are also conducting regular tailor-made surveys to track employers' and individuals' likely responses to the reforms. These include employers who plan to enrol their employees, anticipated participation rates, planned contribution levels and the likely impact on existing pension provision. A full evaluation is planned once the reforms have bedded in and then on an ongoing basis.
	We will continue to work closely with key stakeholders, academics and other relevant government departments as we develop plans for the data and evidence strategy for monitoring the private pension reforms and for monitoring the Government's wider reforms of the pensions system, including reforms to the state pension in the Pensions Act 2007.
	The amendment proposed by the noble Lord, Lord Skelmersdale, would add further requirements on top of the plans that I have already mentioned. A new statutory duty would be placed on the Secretary of State, requiring him to produce an annual report on the impact of auto-enrolment. That duty in those terms may not fit well with the wider evaluation of the reforms and at worst could become a tick-box exercise.
	In addition, if we had to adhere to that annual cycle as proposed, there is a risk that the proposed duty would perversely require the Government to impose additional reporting burdens on employers in respect of qualifying schemes. If we were required to produce a further annual report specifically covering participation and persistency in contributions in qualifying schemes, we could not rule out the possibility that we might need to seek further information or more frequent updates from employers, increasing burdens on them. For example, we may need to ask more frequently about participation rates among the job-holder population or the rates of deferred membership among the job-holder population, or the rates of deferred membership and opt in.
	We believe that it is important to continue to work with key stakeholders to identify the questions that need answering: what data are already available to identify evidence gaps and what is the most effective way to fill those? It is important to concentrate available resources on a balanced programme of data collection, monitoring and evaluation that has been developed carefully with key stakeholders.
	I hope that that has given the noble Lord the clear assurance that we need to monitor and evaluate because in doing so we will build our understanding. However, I do not believe that the proposed narrow annual survey and report is the right way to go. It could, at the margins at least, be counterproductive, and I therefore invite the noble Lord to withdraw his amendment.

Lord Skelmersdale: I am well aware of the reports that the Government publish around the pensions arena, including those that the Minister mentioned. Although I did not say so, I was trying to get at whether the ongoing evaluation of personal accounts, and indeed the new pensions regime, would automatically be included in those reports. I am grateful to the noble Lord, Lord Oakeshott, for his minor quibble that reporting every year, as proposed in my amendment, would be a bit too frequent. I accept that, but I will read carefully what the Minister said on the existing reports in the pensions arena.
	I also note that the Minister will monitor and evaluate the report on the consultation, to be published later this year. Is it the Government's intention to publish it before we finish proceedings on the Bill?

Lord McKenzie of Luton: I cannot give a precise answer to that, but I will check. I can see that it may be helpful if it can be published, but I am not sure that I can give that commitment without checking.
	Perhaps I may take this opportunity to say a little more about the qualifying test and how the employer duty is discharged, which was raised by the noble Lord. Employers and schemes will receive plain English guidance on how to apply the qualifying test and to discharge the employer duties. We will consult on the content and format of the guidance. We have research under way to understand the information needs of small employers to ensure that we communicate with them in the most sensible way.

Lord Skelmersdale: I am grateful for that extra information, but I am afraid that it prompts the same question. I would assume that guidance will not be in final form until 2011, but that will not help the worries of the pension scheme managers, to whom we refer as stakeholders, during the passage of this Bill. Would it not be possible at least to have draft guidance before we finish with the Bill to give an idea of the kind of thing that is expected of employers, and rather more than the Minister has been able to give on our various amendments? That would relieve their minds, and thereby relieve the minds of my noble friend Lady Noakes and myself. With that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 30 [Effect of failure to comply]:

Lord Skelmersdale: moved Amendment No. 90:
	Clause 30, page 14, line 5, leave out subsection (1)

Lord Skelmersdale: This is a simple probing amendment to explore why the Government chose to go down the route of giving the Pensions Regulator sole right to take action in the event of an employer failing to meet his obligations. The clause in Chapter 2 on compliance gives all manner of detail about the methods by which the Pensions Regulator can encourage an employer to meet his duties, and the penalties that can be imposed if he continues to disregard the notices under Clauses 31, 32 or 33. Clause 34, in particular, ensures that a jobholder should be able to have any missed contributions made up to him, but there are many other ways in which a jobholder can be disadvantaged by negligence on the part of his employer.
	Some of these cases, such as the provision of false or misleading information, are covered in Clauses 40 to 42, which specify new offences. How will these two regimes operate together? For example, if a jobholder were to opt out based on misinformation fed to him by his employer, but the Pensions Regulator were to consider the breach too small to be worth the expense of going to court, what rights does the jobholder still have? As I understand the Bill, he has none. To return to repayment of contributions, when the employee chooses to opt out, the Minister indicated earlier that the worker's contribution might be repaid to the employer in the expectation of it being passed on to its rightful owner. What powers does the jobholder have to ensure that that is done? I beg to move.

Lord McKenzie of Luton: I thank the noble Lord for this amendment because it gives me an opportunity to clarify an important point. Clause 30 aims to ensure that there is only one compliance regime for the new duties, which will be enforced by the Pensions Regulator. This means that an individual will not be able to bring an action against an employer solely—I stress, solely—on the basis that he has breached an employer duty provision. It does not affect any pre-existing right of action.
	This amendment, which I understand is a probing amendment, removes that provision and enables individuals, alongside the regulator, to take action against the contravention of an employer duty. There will be a role for individuals in alerting the regulator to non-compliance through whistle-blowing, but allowing individuals to take action against employers directly could lead to duplication, confusion and increased employer burden as an employer could face action from the regulator and individuals at the same time.
	We fully recognise the need for individuals to have access to other routes for redress if a situation of non-compliance has not been pursued or resolved to their satisfaction. A fairer, less burdensome way of achieving that goal is to enable individuals to make a complaint to the Pensions Ombudsman. The ombudsman may then decide to pursue an investigation. Individuals may already make a complaint to the ombudsman under certain circumstances; for example, where they are an actual or potential beneficiary of a pension scheme. We have tabled an amendment to ensure that jobholders opting out of pension schemes are among the groups of individuals who can make a complaint to the ombudsman. The proposed approach will ensure a clear and consistent compliance regime and minimise burdens for employers while providing appropriate protection for individuals. This amendment would undermine that approach. There is nothing in this clause that affects any pre-existing right. For example, where contributions are set out in an employment contract, the individual will retain the right to pursue missing contributions just as he would be able to pursue any other breach of contract. It is just in relation to the duties arising under the Bill where the Pensions Regulator is put in place to ensure compliance.

Lord Skelmersdale: That might have been a hopeful opportunity, but it was also a fairly hopeful response. I shall come to this on another set of amendments, but I do not understand the difference between employment law and pensions law in this area and why they should be different. I agree with the Minister that if my amendment made it possible for there to be two prosecutions of the same employer for the offence, that would be total nonsense. I shall read carefully what he said. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord McKenzie of Luton: moved Amendment No. 90A:
	Clause 30, page 14, line 11, leave out subsection (4)

Lord McKenzie of Luton: In moving Amendment No. 90A, I shall speak also to the other amendments in this group. This chapter introduces the provisions needed to establish the compliance regime for the new duties set out in the Bill. An effective and proportionate compliance approach is essential to the success of these reforms. Overall, our stakeholders recognise the need for an effective regime and for our approach to compliance. Before I begin, I acknowledge that we have tabled a number of amendments to the compliance provisions in the Bill, and it may assist the Committee in considering them if I explain briefly why this has come about.
	The Pensions Regulator emerged as the organisation best placed to deliver the compliance regime following a thorough assessment of options. That decision was taken at a relatively late stage, which did not enable the compliance powers to be fully tailored to the regulator's existing legislative framework or its intended compliance approach. Hence, many of the amendments that we shall consider today are minor technical changes to ensure a proper fit with the regulator's existing powers, clarity of meaning and accurate expression of the policy intent.
	I apologise for the fact that we are dealing with so many government amendments; I know that that does not make life as easy as it might be for the Opposition, in particular. If it would help to have a briefing from officials on any of them, that can be organised.
	It has also been necessary to propose minor amendments to the compliance provisions to ensure that they accurately reflect the employer duty provisions, enabling the regulator to respond effectively to all instances of non-compliance. In addition, some amendments have arisen from discussion in another place, where it was agreed further to consider certain issues raised about the compliance approach. In some cases, it has been necessary to table several amendments to achieve the same purpose. Where that has occurred, I hope that the grouping of the amendments will assist the Committee to consider them effectively.
	With that introduction in mind, I turn to the first such group of government amendments. They are technical amendments intended to improve the drafting of the Bill to ensure that there is adequate protection for individuals in all cases where an employer has breached its duties. The amendments fall into three categories.
	First, government Amendments Nos. 90A, 90K, 90M, 90U and 90V, 92B and 92C, 92E and 92G, relate to Clause 8, which gives individuals who do not have qualifying earnings the option of requiring their employer to make arrangements to enrol them into a pension scheme. As the compliance clauses are currently drafted, the use of the term "jobholder" will exclude workers who do not have qualifying earnings but are in pension schemes by virtue of Clause 8. Those amendments will ensure that, where Clause 8 applies, it can be enforced—in other words, they will enable the regulator to use a single compliance regime in respect of all workers.
	Secondly, as currently drafted, the requirements in Clause 34 for the employer to calculate the amount of contributions not paid to a scheme and to pay unpaid contributions do not apply to compliance notices in cases where that employer fails to auto-enrol a jobholder or induces a jobholder to opt out. The policy intention here is to have a mechanism that ensures that the employer makes up any unpaid contributions in those instances. For that to occur, there must be a recognised appropriate date on which contributions were expected to have been made, but where the employer has not automatically enrolled the jobholder, or has induced them to opt out, there is no scheme and therefore no relevant due date.
	The second group of amendments, Amendments Nos. 91D and 91E and 92E and 92F, ensure that the regulator can issue an unpaid contributions notice in cases of failure to auto-enrol and compliance notices for induced opt-outs. The amendments provide that compliance and unpaid contribution notices can specify an appropriate date from which contributions should have been paid. The amendments also enable the regulator to use a compliance notice for both the remedy of auto-enrolment failure and to recover missed contributions, rather than having to introduce a compliance notice followed by an unpaid contributions notice.
	Finally, Amendments Nos. 91A, 92F and 116A will ensure that the regulator can take enforcement action against an employer in respect of an individual who no longer works for them. That will ensure that compliance notices and unpaid contributions notices can be applied to all employers, past and present. For example, an individual may change jobs, but their original employer has failed to make contributions on their behalf. This set of amendments will enable the regulator to require the original employer to pay the outstanding contributions.
	I apologise for the length of my introduction, but I hope that my explanation has been helpful to the Committee. I beg to move.

Lord Skelmersdale: For once, I am almost speechless. I will have to read carefully what the noble Lord has said when Hansard is published tomorrow. My only comment on this large group of government amendments concerns Amendment No. 91A. It would seem to be more appropriate to look for this provision in Clause 77, on definitions, which applies to the whole of Part 1. I offer that only as a thought. I do not expect the Minister to respond at this moment.

On Question, amendment agreed to.
	Clause 30, as amended, agreed to.
	Clause 31 [Compliance notices]:

Lord Tunnicliffe: moved Amendment No. 90B:
	Clause 31, page 14, line 15, leave out "referred to in this Chapter as"

Lord Tunnicliffe: This group of minor and technical government amendments is designed to ensure that the compliance provisions achieve their intended effect. I will explain each of them briefly. Amendments Nos. 90L, 92H, 97D, 97E and 139A clarify meaning and correct minor exclusions. Clause 31 enables the Pensions Regulator to issue a compliance notice, which may require the employer to take steps to restore the jobholder's position. Subsection (5) spells out what that means for defined benefit schemes. Amendment No. 90L extends the provisions of that subsection to hybrid schemes. It is right that subsection (5) should apply here because hybrid schemes are partly defined benefit in their structure.
	Clause 35 gives the Pensions Regulator the power to issue a fixed penalty notice to persons who fail to comply with the new employer duties and compliance or contributions notices. As drafted, Clause 35(5)(g) refers only to notifying,
	"the employer of the review process",
	and appeal rights, even though fixed penalty notices may also be issued to persons other than employers. Amendment No. 92H corrects that exclusion.
	Amendments Nos. 97D and 97E relate to Clause 41, which extends Section 80(1)(a) of the Pensions Act 2004. These amendments correct drafting to ensure that the extension of Section 80 is clearly expressed. Amendment No. 139A clarifies how Section 80 will be changed. Amendments Nos. 90B, 105A and 123A are drafting amendments to clarify references to the Pensions Regulator, while Amendments Nos. 90T and 91C are drafting amendments to clarify references to unpaid contributions.
	Finally, Amendment No 90N removes the power to make regulations about the application of the employer duties where an employer has been issued with a compliance notice. In its recent report, the Delegated Powers and Regulatory Reform Committee noted that,
	"special provision for employers who are subject to compliance notices could almost certainly be achieved under the wide additional powers conferred by clause 116(3)".
	We note and accept the recommendation of the committee and accordingly are making this amendment to implement it. I beg to move.

Lord Skelmersdale: I am grateful to the Minister for explaining these essentially drafting and technical amendments so clearly. I was particularly impressed by his explanation of Amendment No. 90N, which leaves out the regulating power in Clause 31 on compliance notices. I am delighted that the Government have yet again seen fit to agree with the Deregulated Powers Committee.

On Question, amendment agreed to.

Lord McKenzie of Luton: moved Amendment No. 90C:
	Clause 31, page 14, line 16, leave out "an employer" and insert "a person"

Lord McKenzie of Luton: In moving Amendment No. 90C, I shall speak also to the other amendments in this group. These government amendments are designed to ensure that the Pensions Regulator can respond effectively to all instances of non-compliance. Under Clause 31, the regulator can issue a compliance notice to an employer who fails to meet one of the employer duty provisions. However, there are two scenarios in which this provision would not enable the regulator to issue such a notice.
	The first scenario is where a person fails to meet one of their duties but is no longer subject to that duty at the time that the regulator wishes to issue a compliance notice. For example, an employer might fail automatically to enrol a jobholder, but the jobholder might then leave the job before a compliance notice was issued. Under current provisions, it is not clear that the regulator would be able to seek unpaid contributions on behalf of that jobholder.
	The second scenario is where a duty applies to a person other than an employer. The duties set out in Clauses 2 to 10 will, in the main, fall to employers. These include the core new duties of automatically enrolling jobholders into a pension scheme and paying minimum contributions into that scheme. However, regulations under those sections may prescribe a small number of duties on other individuals. For example, Clause 9 enables regulations to be made detailing the information that a "prescribed person" needs to give to the jobholder. That person would not necessarily be an employer; they could be, for example, a trustee or manager of an occupational pension scheme or the provider of a workplace personal pension. Where duties arise on individuals other than employers, it is right that the regulator should be able to issue a notice if those duties are not met. These amendments will enable the regulator to take that action. It also follows that the Pensions Regulator must be able to issue a notice to a third party who contributes to a breach of the employer duties, whether that duty was breached by an employer or by another person. That is what Amendment No. 90P achieves. In short, these amendments will support a fair and proportionate compliance regime. I beg to move.

Lord Skelmersdale: The Minister has just exemplified a saying that I first heard on the west coast of Scotland: "We think better later". Clearly, he has. However, it occurs to me that as an employer I am responsible for the actions of my staff. Therefore, I wonder what lies behind all this. Perhaps the Minister has explained already who the third party in question is. Therefore, I will have to read Hansard extremely carefully, unless the Minister is able to come back to me now.

Lord McKenzie of Luton: I will try. There are two different things here. As I said, although those employer duties will fall overridingly on employers, there could be instances where an employer duty—for example, in relation to the provision of information—might fall on someone who is not technically the employer. There are further provisions where third-party compliance notices can be given, which is where someone might contribute to the failure of an employer duty. The distinction between those two is that, if the individual to whom the third-party notice is given or is due does not have the employer duty, he or she is not in a position to rectify that failure of duty, although there may be other things that he or she can do. Therefore, there is a distinction between compliance notices relating to employer duties, which could cover people other than those who are technical employers, and third-party compliance notices for those who might contribute to a failure but who themselves do not have the employer duty. I am not sure whether that has confused or enlightened the noble Lord, but I am happy to have another go at it if he thinks that that would help.

Lord Skelmersdale: This looks like another subject for one of the Minister's famous letters; I am grateful for the four that I received this morning on earlier discussions in Committee. In what circumstances would the third party be liable for compliance? I accept that the Bill says that to an extent there are third parties that are involved in all this, so I wonder whether the Government have their policy right. However, I shall look carefully at what the noble Lord has said.

Lord McKenzie of Luton: Perhaps I may try to clarify this a little more. I want to differentiate between compliance notices in respect of failures of employer duties and third-party compliance notices where someone has in a sense contributed to a failure. For example, a third-party compliance notice could be given to a trustee of a pension scheme who has not properly given information to enable the employer duty to be fulfilled. It could also be a payroll provider for the employer who, by not doing something, causes a breach of the employer duties. Those are the sort of situations to which I am referring. However, the individuals or entities themselves would not actually have the duty and therefore there is a need to distinguish them from those who do have the duty. That is why there are two sets of compliance notices.

Lord Skelmersdale: We are getting a little clearer. I can well understand that the trustee, for example, who has given information to the employer who then acts on it might well be prosecutable in certain circumstances, but I fail to understand why, for example, a member of the employer's HR department should have a compliance notice issued against him, as I would have thought that the employer was responsible for his employees. I do not want to take this any further because it is a rather abstruse argument. I shall read carefully what the noble Lord has tried to explain three times now, which is probably enough for the rest of the Committee.

On Question, amendment agreed to.

Lord McKenzie of Luton: moved Amendments Nos. 90D to 90N:
	Clause 31, page 14, line 17, leave out first "employer" and insert "person"
	Clause 31, page 14, line 18, leave out "employer" and insert "person to whom it is issued"
	Clause 31, page 14, line 23, leave out "employer" and insert "person to whom it is issued"
	Clause 31, page 14, line 25, leave out "employer" and insert "person"
	Clause 31, page 14, line 26, leave out "employer" and insert "person"
	Clause 31, page 14, line 27, leave out "employer" and insert "person"
	Clause 31, page 14, line 30, leave out "jobholder" and insert "worker"
	Clause 31, page 14, line 34, after "scheme" insert "or a hybrid scheme"
	Clause 31, page 14, line 35, leave out "jobholder" and insert "worker"
	Clause 31, page 14, line 37, leave out subsection (6)
	On Question, amendments agreed to.
	Clause 31, as amended, agreed to.
	Clause 32 [Third party compliance notices]:

Lord McKenzie of Luton: moved Amendment No. 90P:
	Clause 32, page 15, line 4, leave out "an employer" and insert "a person"
	On Question, amendment agreed to.

Lord McKenzie of Luton: moved Amendment No. 90Q:
	Clause 32, page 15, line 11, leave out "the contravention"

Lord McKenzie of Luton: I shall speak also to the other amendments in this group. Clause 32, to which these amendments relate, enables the Pensions Regulator to issue a third-party compliance notice of the kind that we have just discussed to a person who has contributed to a contravention of an employer duty set out in Clauses 2 to 10. This provision recognises that a third party may bear some responsibility for a failure to meet one of those duties and allows the regulator to issue a notice to that third party requiring that the situation be remedied. Indeed, we were slightly ahead of ourselves in our discussion on the other amendment. These minor amendments would ensure that the provisions reflect the policy intent and that they are consistent with other provisions both in this chapter and the equivalent position in the 2004 Pensions Act.
	I shall try briefly to explain each of them. Amendment No. 90Q addresses subsection (2), which, as currently drafted, directs the third party to take steps to remedy the contravention or prevent a recurrence of the failure. However, a person who is not bound by a duty cannot remedy a contravention of that duty. The third party can take steps only to remedy or prevent a recurrence of its failure. This drafting amendment means that the third-party compliance notice will not direct a third party to do something that it is not able to do.
	Amendment No. 90R ensures that the third-party compliance notice states the period within which a third party should stop taking a particular action where that action is contributing to a breach of an employer duty. It will make this clause consistent with Clause 31(3)(a), reflecting the fact that the principle behind both compliance notices and third-party compliance notices is the same, to ensure that failures can be addressed and put right. It will also ensure consistency with the regulator's existing third-party notice provision in Section 14 of the Pensions Act 2004.
	Finally, Amendment No. 90S states that a third-party compliance notice can inform the recipient that he may be subject to fixed penalties if the notice is not complied with. This is consistent with Clause 31(3)(d). The power to issue fixed penalty notices to third parties is already provided for in Clause 35. Those who receive compliance notices will have every opportunity to contact the regulator and to seek help before penalties are applied. Notifying the recipient of the possibility of financial penalties ensures that recipients are fully informed of the consequences of failure to comply. I beg to move.

On Question, amendment agreed to.

Lord McKenzie of Luton: moved Amendments Nos. 90R and 90S:
	Clause 32, page 15, line 14, at end insert "or must cease to be taken"
	Clause 32, page 15, line 17, at end insert—
	"( ) state that, if the third party fails to comply with the requirements of the notice, the Regulator may issue a fixed penalty notice under section 35."
	On Question, amendments agreed to.
	Clause 32, as amended, agreed to.
	Clause 33 [Unpaid contributions notices]:

Lord McKenzie of Luton: moved Amendments Nos. 90T to 90V:
	Clause 33, page 15, line 25, leave out "unpaid relevant contributions" and insert "relevant contributions that have not been paid"
	Clause 33, page 15, line 27, leave out subsection (3)
	Clause 33, page 15, line 35, leave out "jobholders, or category of jobholders" and insert "workers, or category of workers"
	On Question, amendments agreed to.

Baroness Turner of Camden: moved Amendment No. 91:
	Clause 33, page 15, line 43, at end insert—
	"( ) require, in the event of excessive delay, that interest be paid on unpaid contributions."

Baroness Turner of Camden: I should explain that this amendment was suggested to me by the TUC. As I have already told the Committee, the TUC welcomes the general thrust of the Bill and is entirely supportive of it, but it has one or two points of view that it has put to me that I thought warranted tabling amendments. We agree that there should be a robust compliance regime to ensure that firm action is taken against a minority who fail to comply with their obligations under the Bill. This should be supplemented by penalties for non-compliance severe enough to provide a deterrent effect. Therefore, the provisions already in the Bill on compliance are to be welcomed.
	Workers, however, should not experience any detriment or financial disadvantage because of an employer's failure to enrol them into personal accounts or a qualifying pension scheme. There is a strong case, I believe, for interest payments on unpaid contributions to be made for any delay beyond a reasonable administrative period. That is what my amendment is designed to achieve. It would have the necessary deterrent effect and I hope that the Government will feel disposed to agree to it. I notice that the amendment has been grouped with government Amendment No. 92D, which, although on a different issue, nevertheless seems to accept the idea of interest being paid on unpaid relevant contributions. I hope, therefore, that my amendment will be accepted, as it seems to fit as new paragraph (g) in Clause 33(5). I beg to move.

Lord Oakeshott of Seagrove Bay: The noble Baroness's amendment seems fair and sensible. We look forward to hearing from the Minister what a reasonable administrative period would be or whether he thinks that there are practical problems. However, the principle that an employee should get the full benefit of the matching employer contributions if those contributions are delayed through no fault on the part of the employee—and as long as there is not a strong excuse on the part of the employer—seems to us to be the right one.

Lord McKenzie of Luton: I start by thanking my noble friend Lady Turner for tabling this helpful amendment, whose intention I agree with. I am also pleased to note the support of the noble Lord, Lord Oakeshott. Clause 33 deals with the power of the Pensions Regulator to issue unpaid contributions notices to employers. This amendment would give the regulator the power, when issuing such a notice, to require the employer to pay interest on the arrears of contributions. When pension contributions are not paid on time, the scheme trustees lose the chance to invest the money on the workers' behalf and there is a risk that as a result an individual's pension pot may be smaller over time.
	When this matter was discussed in the other place, we accepted the need for some compensatory payment that would put the worker into the position in which they would have been had the contributions been paid on time. We announced our intention to introduce an amendment to require employers to pay interest on late-paid contributions. Clearly it would be difficult, if not impossible, to assess completely accurately the loss of investment value to an individual worker, given the numbers of people involved and the different investment strategies and portfolios of individual schemes and investment managers and so on. However, it would be relatively straightforward to require an employer to calculate and pay interest on the arrears of contributions. Such payments would both recompense workers for the lost investment opportunity and give employers an incentive to pay contributions on time.
	The Pensions Regulator's powers to calculate and, where necessary, estimate the amount of unpaid contributions are set out in Clause 34. While I completely agree with the intention behind my noble friend's amendment, we think that the ability to require interest to be paid would best appear in Clause 34, which is why we have tabled the government amendment. This will take the form of a power to require interest to be paid. The amendment would give the Pensions Regulator the power, when it issues such a notice, to require the employer to pay interest on the arrears of contributions should certain conditions apply. These conditions, along with the rate of interest and other technical details, will be prescribed in secondary legislation. This will allow for further discussion with the regulator and stakeholder consultation on the detail of how the provision will operate.
	I hope that I have assured my noble friend that I agree with the principle that she has raised and I thank her for doing so. Given my assurances that the government amendment will deliver the same intention, I respectfully ask her to withdraw her amendment.

Baroness Turner of Camden: I thank my noble friend for that assurance. I also thank the noble Lord, Lord Oakeshott, for supporting the amendment. He is quite right about what is excessive delay—I understand that. In view of the assurances that the Minister has given, this is obviously a matter for regulation. I am glad that the principle has been accepted and, in those circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord McKenzie of Luton: moved Amendment No. 91A:
	Clause 33, page 15, line 43, at end insert—
	"(6) In this section, "employer" in relation to a worker means the person by whom the worker is or, if the employment has ceased, was employed."
	On Question, amendment agreed to.
	On Question, Whether Clause 33 shall stand part of the Bill?

Baroness Noakes: I wish to debate Clauses 33 and 34 standing part in order to ask the Government to explain the relationship between these clauses and the provisions of the Pensions Act 1995. What I am about to say is based on briefing from the Law Society of Scotland.
	Clauses 33 and 34 deal with unpaid contribution notices. There are already sanctions and compliance powers in existence under Sections 87 and 88 of the Pensions Act 1995 relating to money purchase schemes. Can the Minister explain why these additional powers are being created in Clauses 33 and 34 and why the existing powers are not adequate?
	I cannot see that the Bill repeals any powers in the 1995 Act but it clearly adds powers through these clauses and others. Can the Pensions Regulator act under both this Bill and the 1995 Act in respect of the same issues? Are the Government satisfied that they have not ramped up the regulatory burden on companies in a disproportionate way as a result of the Bill? I look forward to the Minister's comments.

Lord McKenzie of Luton: I thank the noble Baroness. I understand the import of the debate that she wants to have and I shall try to deal with the points she raises.
	Clauses 33 and 34 form a key part of the overall compliance regime. Where employers are late in paying contributions, these clauses will enable the regulator to issue compliance with unpaid contributions notices to employers directing them to pay unpaid contributions into a pension scheme. These clauses build on and streamline the regulator's current approach to following up late contributions and will enable it to deal with the higher volume of late payments expected after 2012. While it is expected that most employers will co-operate fully with the new system, it is possible that a minority will fail to fulfil their responsibilities. The compliance regime will therefore need to take firm action against this minority of employers without imposing unnecessary burdens on responsible employers.
	The noble Baroness specifically asked why the regulator needs new compliance powers? The Pensions Regulator has a range of powers under existing pensions legislation, as the noble Baroness asserted. These include powers to issue notices, such as improvement notices, and civil penalties. As noble Lords are aware, the Bill introduces a range of new duties. We expect most employers to comply with those duties and, as now, the regulator's focus will be on educating and enabling them to do so. But an effective enforcement regime is needed where these initial steps fail.
	There are two reasons why new compliance powers are needed to enforce the new provisions. First, they are needed to ensure that the regulator can enforce compliance with the new duties in the Bill—for example, the regulator's existing improvement notice powers would not apply to an employer who fails the automatic enrolment duty—and, secondly, more streamlined powers are needed to equip the regulator for its new compliance role.
	That, in essence, is why the new compliance powers are needed. The noble Baroness asked which powers, if both potentially applied, would be used. The compliance powers provided in the Bill would apply. I hope that has dealt with the point but I shall try again if it has not.

Baroness Noakes: Can the Minister explain why the Government are not removing anything from the 1995 Act if they are producing streamlined and better powers under this Bill? Is there not a case—there is always a case—for removing regulatory burdens, especially where so-called improved versions of legislation are introduced?

Lord McKenzie of Luton: It is because the existing powers are needed to deal with the existing business of the Pensions Regulator; these powers are focused on the new duties that arise under the Bill. However, they are still relevant to the other powers and responsibilities of the Pensions Regulator. I have a note of the detail on that which I will be happy to share with the noble Baroness, but I expect there will be no appetite for me to do so at the moment.
	The other point to bear in mind is that, to date, the Pensions Regulator regulates an environment where there is voluntary sign-up to pension arrangements. Obviously auto-enrolment takes us into a new era and there are likely to be many new employers coming into pension provision for the first time. I think overwhelmingly they will be supportive of it—some may be reluctant and will need support and guidance initially—but there will be a need for streamlined powers to enforce compliance where not.

Baroness Noakes: The Minister has revealed his true clothes. We are back to, "All employers are potentially evading their responsibilities and so we have got to have bigger and better powers to bash them with". I regret that the Minister has replied in those terms.

Clause 33, as amended, agreed to.
	Clause 34 [Calculation and payment of contributions]:

Lord McKenzie of Luton: moved Amendment No. 91B:
	Clause 34, page 16, line 3, after "of" insert "a contravention of section 2(1) or"

Lord McKenzie of Luton: I shall speak also to the other amendments in the group. It is essential that a worker's decision on whether to join a qualifying pension scheme is taken freely and without influence from the employer. We know that the vast majority of employers will not put pressure on their workers around this decision but there is a risk that a minority might, and we have recognised from the start that that risk must be properly managed.
	We have listened to the repeated concerns of the Opposition in the other place that existing measures in the Bill did not go far enough in this regard and several stakeholders, including the Equality and Human Rights Commission and the TUC, have also expressed concern.
	We now propose to introduce an amendment that I hope will satisfy those calls for a stronger approach by sending out the clearest possible message to employers that trying to encourage or force workers to opt out from, or cease, pension scheme membership is unacceptable. Government Amendment No. 106A will introduce a prohibition on such behaviour.
	The prohibition will be enforceable by the Pensions Regulator alongside its new role of maximising compliance with the employer duties in Chapter 1 and the prohibited recruitment conduct clause, Clause 49, in Chapter 3. The regulator will have available to it the full suite of enforcement powers appropriate to this role. This group of amendments contains proposed consequential amendments to several of the Chapter 2 compliance clauses. These changes will enable the regulator, where it believes that an employer has contravened the prohibition, to be able to investigate matters and, if appropriate, issue a compliance notice setting out what action is needed to remedy the contravention. If that notice is not complied with, the regulator will be able to issue penalty and escalating-penalty notices, just as it can in relation to failures to comply with Chapter 1 employer duties.
	However, the aim of compliance activity in this area is not simply to punish non-compliant employers in order to deter them and others from such behaviour in the future. We want to ensure that individuals are, so far as possible, put back into the position they would have been in if the inducement had not happened. Employers could therefore be required by a compliance notice to enrol workers back into qualifying scheme membership where appropriate and to make back payments of employer contributions owed from the time the inducement occurred. We are aware that going back in time like this where an opt-out is found to have been induced could create a risk of uncertainty for all parties involved. To manage that risk, we feel it is important that there are time limits within which complaints can be made or investigations launched. These limits should also discourage the possibility of vexatious claims from some individuals. We understand that there are widely differing views among stakeholders on how long that period of time should be. We wish to consult on that to ensure that the views of all interested parties are considered before determining the issue in regulations.
	I shall briefly explain the other amendments in this group, which are consequential upon the new clause. Amendment No. 91B amends Clause 34 in order to allow for the calculation and payment of contributions that have been unpaid as a result of the induced opt-out or cessation of membership. It does so by extending Clause 34 to contraventions of Clause 2(1), and subsection (2) of the new inducement clause provides that Clause 34 applies to a contravention of the inducements clause as it applies in relation to a contravention of Clause 2(1).
	Amendments Nos. 98B and 99ZA ensure that the regulator's powers to require information and enter premises are available to it in the context of its role in maximising compliance with the two Chapter 3 prohibitions on inducements and certain forms of recruitment conduct. Government Amendment No. 99ZA also ensures that these powers are available in respect of any corresponding provision in Northern Ireland. I hope that these amendments will find favour, and I beg to move.

Lord Skelmersdale: My colleagues in another place will be delighted that a clause of this sort is now to be included in the Bill, and I congratulate the Minister on moving this amendment, to which I do not object—but I have a problem. He said that employers could be made to re-enrol a worker where they have persuaded him to opt out with either financial inducements or any other inducements, perhaps payment of overtime. When all that is settled and the employer is clearly in the wrong, it may be that the worker in question will still want to opt out, now of his own volition. Has the Minister considered what would happen then in relation to Amendment No. 106A?

Lord McKenzie of Luton: I can see that those circumstances might arise, and I do not see that they would be precluded. This clause says right at the start that,
	"An employer contravenes this section if the employer takes any action for the sole or main purpose of ... inducing a worker",
	and so on. If they originally took that action to induce a worker, the matter has been rectified and the worker has been enrolled but then decides to opt out, I do not fundamentally see a problem with that. There would be issues regarding evidence and the facts and circumstances of a specific case, but the opt-out should not be precluded in the circumstances the noble Lord suggests.

Lord Skelmersdale: Obviously it is the worker's absolute right to opt out, whether or not an inducement has been offered or even received. My question was directed to the effect of compliance, but if the Minister is saying that if a wrong has been committed, no matter what happens afterwards, whatever compliance notices, fines and so on are produced from the regulator, then I understand that point of view. I was just trying to clarify what the Government were actually thinking in this area, but I suspect that there is no point in pressing the point now.

Lord McKenzie of Luton: I will reflect further on that point because it is an interesting one. However, if we are talking about the same act of inducement that first time around caused the employee to opt out, but after a compliance notice the employee was then auto-enrolled into an auto-enrolment scheme and then chose to opt out, one would have to consider the juxtaposition of those events and whether effectively the first inducement so tainted the subsequent decision that it was wrapped up in it. One would need to go into more detail. I am happy to do that and discuss it with officials. It is a practical matter; if there is evidence that there was inducement the first time around and there was an opt-out that followed pretty swiftly afterwards the second time around, there might be some difficulty with evidence. We will have a look at that; the noble Lord might even receive one of my letters on that subject.

Lord Skelmersdale: I am very grateful.

On Question, amendment agreed to.

Lord McKenzie of Luton: moved Amendments Nos. 91C to 91E:
	Clause 34, page 16, leave out line 8 and insert "are of a description specified in the notice ("unpaid relevant contributions");"
	Clause 34, page 16, line 10, leave out "due" and insert "appropriate"
	Clause 34, page 16, line 11, leave out "33(3)(a)" and insert "(Meaning of "relevant contributions" )(2)(a)"
	On Question, amendments agreed to.

Lord Skelmersdale: moved Amendment No. 92:
	Clause 34, page 16, line 12, leave out paragraph (c)

Lord Skelmersdale: This is a probing amendment to seek a clearer understanding of how the repayment of contributions will operate. As I understand it, it is possible for a repayment to go in one of at least three ways. The first and simplest is that within the prescribed period—presumably a grace period for employers who generally misunderstood their duties—both the employer and the jobholder pay in the contributions that they have missed. Another possibility is that the jobholder might decide that he will opt out of repaying missed contributions, although the employer is still liable for his portion.
	The complication comes in when the employer does not repay the contributions within the prescribed period. As I understand from subsection (2)(c), he then becomes liable for the entire shortfall, both the employer's contribution and the jobholder's. Is it the case, then, that if the jobholder were not to pay back his missed contributions, the employer's liability is that much higher? It would be helpful if the Minister could explain. I beg to move.

Lord Brabazon of Tara: If this amendment is agreed to, I cannot call Amendment No. 92A.

Lord Tunnicliffe: I am grateful to the noble Lord for raising the important issue of the policy on restitution. As we have already discussed, making contributions to pension schemes in full and on time is vital to the growth of the individual's pension fund. This is one of the key intentions of the compliance regime and the focus of this subsection of the Bill.
	Where employers are late in paying contributions for a short period, which will be set by regulations, we propose that they be required to pay only backdated contributions. Their worker can choose whether to pay their own missed contributions and elect to do so in instalments. However, where an employer is late paying contributions for a longer period, the worker may not be able to pay arrears of their contributions. Without the worker contributions, an individual's pension pot will be significantly smaller over time.
	In this situation, it would be unfair if workers were disadvantaged by their employer's failure to pay contributions on time. Therefore, where the contribution arrears are for a longer period, the employer may be required to pay both their own arrears and those of their worker. As well as being fair to the worker, it should act as a strong incentive for employers to comply and pay contributions on time. The principle behind the clause is supported by a range of stakeholders, including Help the Aged, the TUC and Which?. Certain stakeholders, including Help the Aged and the TUC, have suggested that the period be three months. However, before we identify a period, I want to discuss it fully with stakeholders, including business organisations.
	The amendment would remove the requirement on employers to restore missed worker contributions even where they had been non-compliant for a long period. It would mean workers ending up with a smaller pension pot, which, I am sure we all agree, would be undesirable. In addition, as I have just said, it would reduce the incentive for employers to pay on time and mean that scheme members lost out on the investment value of their contributions. I therefore urge the noble Lord to withdraw his amendment.

Lord Skelmersdale: I described it as a probing amendment and it was a real description—noble Lords might think, "for once". However, I still find a little confusing in paragraph (c) the words
	"on the employer's own account"
	and shall read carefully what the noble Lord, Lord Tunnicliffe, said. I assume that it means for both of them, as I said in my opening remarks, but if I am wrong, I will no doubt get the answer from my reading of Hansard. I therefore beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord McKenzie of Luton: moved Amendments Nos. 92A to 92F:
	Clause 34, page 16, line 13, leave out "due" and insert "appropriate"
	Clause 34, page 16, line 17, leave out "jobholder" and insert "worker"
	Clause 34, page 16, line 20, leave out "jobholder" and insert "worker"
	Clause 34, page 16, line 21, at end insert—
	"( ) if the contributions are payable to a money purchase scheme, a hybrid scheme or a personal pension scheme, a requirement to pay interest on the amount required by the notice to be paid in respect of unpaid relevant contributions, at a rate and in respect of a period determined in accordance with regulations."
	Clause 34, page 16, line 25, leave out "jobholder" and insert "worker"
	Clause 34, page 16, line 28, at end insert—
	"(5) In this section, "appropriate date" means—
	(a) in the case of a compliance notice, such date as may be specified in the notice;(b) in the case of an unpaid contributions notice, the due date within the meaning of section 33(4).
	(6) In this section, "employer" in relation to a worker means the person by whom the worker is or, if the employment has ceased, was employed."
	On Question, amendments agreed to.
	Clause 34, as amended, agreed to.

Lord McKenzie of Luton: moved Amendment No. 92G:
	After Clause 34, insert the following new Clause—
	"Meaning of "relevant contributions"
	(1) In sections 33 and 34 "relevant contributions" are—
	(a) in relation to a jobholder, employer contributions payable to a qualifying scheme in relation to the jobholder;(b) in relation to a worker to whom section 8 applies, employer contributions payable to a pension scheme which satisfies the requirements of that section.
	(2) In subsection (1), employer contributions means contributions payable by the employer—
	(a) on the employer's own account (but in respect of the worker), or(b) on behalf of the worker out of deductions from the worker's earnings."
	On Question, amendment agreed to.
	Clause 35 [Fixed penalty notices]:

Lord Skelmersdale: moved Amendment No. 92GA:
	Clause 35, page 17, line 7, leave out subsection (4) and insert—
	"(4) The amount of any financial penalty imposed under subsection (1)(a), (b) or (d) must not exceed £5,000.
	(4A) The amount of any financial penalty imposed under subsection (1)(c) is, subject as follows, to be 50% of the total of the amounts referred to in subsection (4B).
	(4B) The amounts are the amounts specified under section 33 (unpaid contributions notice).
	(4C) If a financial penalty as calculated under subsection (4A) would be less than £100, the financial penalty specified in the notice shall be that amount.
	(4D) If a financial penalty as calculated under subsection (4A) would be more than £5,000, the financial penalty specified in the notice shall be that amount.
	(4E) The Secretary of State may by regulations—
	(a) amend subsection (4A) so as to substitute a different percentage for the percentage at any time specified there;(b) amend subsection (4C) or (4D) so as to substitute a different amount at any time specified there.
	(4F) If the employer on whom the notice is served, within the period of 14 days beginning with the day on which the notice was served—
	(a) pays any amount required under section 34 above, and(b) pays at least half the financial penalty,
	he shall be regarded as having paid the financial penalty."

Lord Skelmersdale: I shall speak also to Amendments Nos. 92JA, 93, the Question whether Clause 36 should stand part, 106ZA and 106ZB. The operative part of all this is Amendment No. 92GA.
	It is unusual for a Member of the Opposition to produce quite as detailed a piece of drafting as I have done, but my amendments are based on a provision in the Employment Bill, which recently passed through this House and is proceeding through another place. I make it very clear for the avoidance of doubt that I will not press the amendments; they are intended to probe DWP Ministers' approach to compliance and contrast it with that of their colleagues in a different department.
	In the Employment Bill, the Government seek to amend legislation dealing with employers' compliance with the national minimum wage, as the Department for Business, Enterprise and Regulatory Reform apparently feels that the current penalty is unclear and not a sufficient deterrent. On these Benches, we had no strong objections to the Government's plans. There is evidence of wilful non-compliance; the measures were consulted on fully; and the result is a clearly defined penalty with an incentive for employers to make good their arrears quickly.
	Unfortunately, none of the good practice evident in the Employment Bill seems to have made an appearance in the Pensions Bill. Clauses 35, 36 and 51 represent a marked departure from the principles on which DBERR based its compliance legislation. My amendment therefore brings forward those aspects of the Employment Bill that the Minister would do well to consider in this case.
	DBERR agreed with many of the respondents to its consultation, including the CBI, chambers of commerce and the Forum of Private Business, that using a multiple of arrears was a sensible, proportionate way to enforce compliance, hence my new subsection (4A). This Bill, under DWP's aegis, has failed to ensure proportionality and does not provide clarity. Its provisions instead would allow penalties to be arbitrary, inconsistent and disproportionate to the non-compliance.
	I have no doubt that the Minister will bring forward his favourite word, "flexibility", when defending the non-specific nature of these penalties. Perhaps he will suggest that in cases where it was clearly a mistake on the part of the employer rather than wilful non-compliance there should be no penalty at all. If he were to make that argument, I would be in complete agreement, but my amendment would in no way force the regulator to impose a penalty in the event of any non-compliance. The employer would already have ignored a contribution notice under Clause 33 before Clause 35 comes into play, and even if this had happened, subsection (1) does not force the regulator to impose a financial penalty if it does not feel that it is warranted.
	I sincerely hope that it is the regulator's intention to be very light handed when imposing financial penalties. The employer duties set out in the Bill will be many and varied and, as we have heard, are not even close to being fully defined. The number of unintentional breaches may be very high as employers, particularly in small businesses, struggle to absorb the burden that the legislation will place on them. To impose penalties on them for breaches that they have every intention of rectifying would be both unfair and counterproductive to the long lasting success of auto-enrolment. For this reason, DBERR, and my amendment, would ensure an incentive for prompt repayment: a 50 per cent discount for making good any arrears or paying any penalty promptly.
	Perhaps the Minister will criticise my amendment and, therefore—I presume—his colleagues in DBERR, for not providing a suitably large deterrent. The upper limit specified in my amendments is £5,000 rather than the astronomical £50,000 in the Bill. DBERR's consultation specifically addressed this issue. It pointed out that only 3 per cent of cases investigated in 2005-06 would have required a penalty higher than £5,000, and it felt that they were so serious as to be better dealt with by criminal prosecution. Moreover, the government documentation also highlights concern that a disproportionate civil penalty would breach Article 6 of the ECHR. Why is this concern not felt by Ministers in the DWP?
	For those reasons, DBERR also considered carefully, and then rejected, any thought of an escalating penalty. The best way to deter the worst offenders was again stated to be through criminal prosecution. Clause 36 of this Bill instead sets out an extraordinarily open-ended escalating penalty.
	My two amendments to Clause 36 highlight two aspects of this flexibility. First, the clause does not limit the regulator to using the escalating penalty only in proven cases of non-compliance. My amendment would make certain that a fixed penalty had been ignored before allowing its use. Secondly, there is no upper limit whatever in this clause. For the daily limit of £10,000, we could be seeing enormous sums, easily capable of bankrupting a business, becoming due in a very short period. My amendment therefore follows my line of thinking about Clause 35—that it would be sensible to involve the courts in extreme cases of non-compliance.
	As I said at the beginning, these are essentially probing amendments designed to give the Minister an opportunity to explain his approach. We have not heard so much about joined-up government in recent months as we used to, but I assume that the Government would still wish to be thought of as reasonably consistent across their departments. I look forward to hearing his response. I beg to move.

Lord Oakeshott of Seagrove Bay: I congratulate the noble Lord, Lord Skelmersdale, on his hard work in drafting this, and for the extensive evidence of what is going on in DBERR. I am sorry that I am not as au fait with that as I should be. However, I am bound to say that this seems a pretty light slap on the wrist—or, should I say, half a slap on the wrist with the 50 per cent discount. I look forward to hearing what the Minister says, but the Conservative approach is rather lenient here.

Lord McKenzie of Luton: I thank the noble Lord, Lord Skelmersdale, for this amendment. I understand that it is by way of a probing operation. He has raised issues about the penalty provisions in Clauses 35, 36 and 51. I shall also respond to his request for a clause stand part debate on the escalating penalty provision in Clause 36.
	These are important provisions, and I thank the noble Lord for giving the Committee the opportunity to examine them more closely today. It may assist our consideration of these amendments if I begin with an overview of the compliance regime and the role of penalties within that regime. While we are confident that the majority of employers will meet their new duties, we need an efficient and effective compliance regime to maximise compliance. The proposed approach comprises three stages: educating, enabling and enforcing. The emphasis is on educating and enabling employers to meet their duties; only when that fails will the pensions regulator take proportionate, graduated enforcement action. That action will start with statutory notices, moving to fixed and escalating penalties if non-compliance persists. The availability of financial penalties will therefore play a small but significant role in securing compliance and enabling jobholders to access pension saving.
	I understand that the noble Lord has tabled some of these amendments to explore why we have not adopted the same legislative approach and penalty structure as in the revised national minimum wage regime set out in the Employment Bill. Before addressing each of his amendments, it may be helpful to set out why our approach differs to the proposals for the minimum wage.
	I reassure noble Lords that the compliance regime for the reforms in this Bill will accord with good practice and available evidence. We are building on analysis of other regulatory regimes, not only the minimum wage regime but also the compliance approach for PAYE requirements; the Companies House regime for ensuring that corporations file their accounts; and, internationally, the approach taken for the superannuation scheme in Australia. We are further developing the penalty regime in line with the recommendations of the Macrory review and with regard to the regulatory principles of transparency, accountability, proportionality and consistency.
	There is no doubt that we are at a different stage from the national minimum wage regime, which is now in a position to place more specific provisions in the Bill in the light of practical experience and the data accumulated on the enforcement approach. That approach cannot be replicated for an entirely new regime. We have been clear on the maximum penalty levels, which are set out in the Bill and have broad stakeholder support, but the actual penalty levels should be set out in regulations. That will enable adjustments to be made below the maximum level in the Bill when it becomes clearer which approach is most effective. It will enable detailed consultation with the regulated community, and other stakeholders, on the structure of the penalty.
	On the specific amendments tabled by the noble Lord to Clauses 35 and 51, since the provisions of the Employment Bill were carefully tailored to meet the needs of the national minimum wage regime, some problems arise when they are translated into the context of our new regime. For example, reducing the £50,000 fixed-penalty ceiling to £5,000 in Clauses 35 and 51 would make the regime out of step with the regulator's current powers. Under Section 10 of the Pensions Act 1995, the regulator has the power to impose fines of up to £50,000. We believe that it is important to ensure that complying with the new duty is seen to be as important as complying with existing legislation. Several stakeholder groups, including the CBI, have indicated their broad support for this decision.
	Secondly, the noble Lord's amendment to Clause 35 would calculate penalties associated with unpaid contributions based on the amount unpaid, just as the Employment Bill calculates penalties based on the amount of underpaid wages. However, in the pensions context, we have a series of related duties, and there are practical implications of different breaches carrying different penalties. For example, an employer who does not automatically enrol one of their workers into a qualifying scheme inflicts much the same harm as an employer who does not pay over the relevant contributions to a scheme. It is therefore unclear why they should be treated differently. We are not ruling out the possibility of tying penalties in certain circumstances to the nature of the contravention. However, we would like the opportunity to conduct full preparatory research and engage in formal consultation first.
	Thirdly, the noble Lord's amendments to Clauses 35 and 51 place an early-payment discount in the Bill. Such a discount is a common feature of penalty-based regimes, and is a strong candidate for inclusion among the options to be brought forward in our consultation and regulations. Early-payment discounts promote rapid compliance, which is why the Government felt that it was crucial to place this in the Bill in the national minimum wage context. Time is of the essence when we are talking about remedying shortfalls in the pay packets of some of the most vulnerable workers in our society. The implications are not identical with reference to late payment of pension contributions—but, again, this is a strong candidate for inclusion in our regulations.
	I hope that I have reassured the noble Lord with regard to the amendments tabled to Clauses 35 and 51. On the amendments to Clause 36, a similar question of penalty caps is raised in relation to escalating penalty notices. The amendment would cap the total amount payable for a single breach at £50,000. I shall explain why we chose to cap the amount of the daily escalating rate at £10,000 but not to cap the total amount payable under these notices. The essence of an escalating penalty is that its value directly reflects how long an employer continues not to comply. Such penalties will be applied only in cases of very persistent non-compliance. We are not alone in recognising the benefits of including escalating penalties in our toolkit; other regimes such as HMRC PAYE also have the option to issue them. I share the noble Lord's concern that penalty levels should be proportionate and fair, but am concerned to maintain the intention that escalating penalties directly reflect the extent to which an employer delays meeting their responsibilities. A cap on the escalating penalty would effectively cap the period within which employers are deterred from continuing to breach their duties.
	As for the noble Lord's second amendment to Clause 36, the intention is to ensure that daily escalating penalties are issued only if an employer effectively ignores a preceding fixed penalty. I assure him that we have always envisaged a sequential issue of penalties as part of the wider graduated approach. However, there may be cases where the recipient of a fixed penalty notice may pay the penalty but does not put right the situation that caused it. In these circumstances, the regulator will require the option of issuing escalating penalties to ensure compliance.
	I hope that I have reassured the noble Lord, and that he will withdraw these amendments, which I understand are probing in nature. I have set out the background to why these provisions are in the Bill in this form.

Lord Skelmersdale: I am grateful for that long and fairly explanatory answer. I accept that there are already powers in previous legislation to allow the regulator to impose fines of up to £50,000. Can the Minister tell me whether the regulator has any powers to use escalating fines thereafter?
	A compliance regime must be both efficient and practical. There will be small differences with the national minimum wage. However, the regulator having the power to impose £50,000 in certain circumstances does not mean that we could not take the opportunity of the Bill to review whether that has been effective, and whether £50,000 is the right level. How many times has the regulator used the maximum fine? If he has not, that is a good reason to look at the whole thing again. I am glad that the Government are prepared to look at a 50 per cent reduction for paying the fine early and consult upon it—the least that they could do under the circumstances.
	I said this was a probing amendment and I meant it. Unless the Minister wants to come back to me, I shall withdraw it now.

Lord McKenzie of Luton: I do not want to deter the noble Lord from withdrawing his amendment, but it might be helpful if I deal with a couple of points that he has raised. He asked whether there are currently escalating penalties. I understand that there are not. Penalties in the Bill should not generally signal a review of the Pensions Regulator's powers. I presume that consultation and discussion of these powers might at least butt up against that.
	On the argument that a system of penalties would put firms out of business, the primary aim of the compliance regime is to encourage the employer to comply. Financial penalties are only one of a number of tools to help us to achieve this. The compliance regime is designed to ensure that employers can make redress or put things right in the first instance. Penalties would only be imposed when employers continue to breach requirements after they have been told how to comply. The regulator will have some discretion on whether to enforce the payment of the penalty. In situations where the employer can demonstrate to the regulator that he is at risk of becoming insolvent if he pays the penalty, the regulator could exercise that discretion; for example, the regulator could withdraw the penalty to allow the employer to pay any outstanding contributions.

Lord Skelmersdale: I am grateful. Clearly, however, the Bill contains a ratcheting-up of the compliance regime that already exists within the pensions framework, albeit for a slightly different purpose. I will have to look at that extremely carefully. I said that I would withdraw the amendment, and I will. However, I certainly reserve the right to bring back the issue in one form or another, perhaps one not directly relevant to the national minimum wage, at the next stage of the Bill. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord McKenzie of Luton: moved Amendment No. 92H:
	Clause 35, page 17, line 22, leave out "employer" and insert "person to whom the notice is issued"
	On Question, amendment agreed to.

Lord Tunnicliffe: moved Amendment No. 92J:
	Clause 35, page 17, line 23, leave out "appeal" and insert "referral to the Pensions Regulator Tribunal"

Lord Tunnicliffe: A key principle of our compliance regime will be a right to appeal for recipients of fixed and escalating penalty notices. I have tabled three sets of government amendments that improve how the policy is reflected in the Bill. The first set, Amendments Nos. 92J, 92K, 92L and 93A, corrects the drafting of Clauses 35 and 36 to ensure that these rights of appeal are expressed accurately and consistently across the Bill. The second set, Amendments Nos. 95A and 95B, ensures that there is an opportunity for the regulator to conduct a formal review before any case reaches the tribunal. The amendments require recipients of fixed and escalating penalty notices to request a review before appealing to the tribunal. This will ensure that any review is completed before a formal appeal process can begin. A review will enable some cases to be addressed before they reach the tribunal and hence could provide a quicker resolution for recipients. It will also enable the tribunal to focus only on cases that could not be addressed by the regulator.
	The final set, Amendments Nos. 95C and 95D, aims to address concerns raised by the Delegated Powers and Regulatory Reform Committee about the regulation-making power in this clause. The committee was concerned that the power was too wide and recommended that the procedures and powers of the tribunal should be placed in the Bill, as they are in the Pensions Act 2004. We are addressing the committee's concern by removing the regulation-making power and bringing the new references for the Pensions Regulator Tribunal into the existing provisions set out in the Pensions Act 2004. These amendments apply the tribunal's procedural rules in Schedule 4 to the Pensions Act 2004 to the new references. They also provide for those references made under the new compliance regime to be treated slightly differently where necessary.
	We are also further considering the rights to redress in light of questions from the Select Committee on the Constitution. My noble friend will return to our intentions in this respect when he responds to Amendment No. 94 in the name of the noble Lord, Lord Skelmersdale. These amendments will ensure a robust and speedy right of redress for those issued with penalties under the new compliance regime. I beg to move.

On Question, amendment agreed to.
	Clause 35, as amended, agreed to.
	Clause 36 [Escalating penalty notices]:
	[Amendment No. 92JA not moved.]

Lord McKenzie of Luton: moved Amendments Nos. 92K and 92L:
	Clause 36, page 17, line 37, leave out "appeal under section 39 against" and insert "referral to the Pensions Regulator Tribunal under section 39 in respect of"
	Clause 36, page 17, line 38, leave out "appeal" and insert "reference"
	On Question, amendments agreed to.
	[Amendment No. 93 not moved.]

Lord McKenzie of Luton: moved Amendment No. 93A:
	Clause 36, page 18, line 18, leave out "appeal" and insert "referral to the Pensions Regulator Tribunal"
	On Question, amendment agreed to.
	Clause 36, as amended, agreed to.
	Clause 37 agreed to.
	Clause 38 [Review of notices]:

Lord Skelmersdale: moved Amendment No. 94:
	Clause 38, page 19, line 2, leave out "may" and insert "shall"

Lord Skelmersdale: I shall also speak to Amendment No. 95. Many of these compliance provisions are extremely time-sensitive. We have discussed the enormous escalation of a penalty notice that might occur within a very short time, as well as the importance of an employer complying with an unpaid contributions notice within the prescribed period. It therefore seems to be a necessity rather than an option that, in the event of a review of a notice, its effect will be suspended. The amendment would make such a suspension the default position, allowing the employer to clarify any uncertainty or to plead his case as to why the notice is unnecessary without having to be concerned about how long it will take for the regulator to get back to him. Amendment No. 95 is even simpler. Could the Minister please clarify the difference between substituting a different notice, as allowed by subsection (6)(b) and the power to vary a notice in subsection (6)(a)? Why does the Bill require both options? I beg to move.

Lord McKenzie of Luton: The Bill gives the Pensions Regulator power to review all notices that it may issue as part of the compliance regime. This includes compliance notices, third-party and unpaid contributions notices and fixed and escalating penalty notices. This provision is an important safeguard for those receiving such notices. The review will be wide-ranging, giving the recipient an opportunity to explain their case and provide further information that might be relevant to the decision to issue the notice.
	The noble Lord has tabled two amendments to this clause and I am grateful to him for the opportunity to discuss the review process. With regard to the first, as my noble friend indicated, he echoes the House of Lords Select Committee on the Constitution, which has recently written to us on this matter. As the Bill stands, the regulator is allowed to suspend proceedings in relation to a notice while that notice is under review, but retains the discretion whether to use this option. Our approach throughout the compliance provisions of the Bill has been to give the regulator powers rather than obligations. This is intended to ensure maximum operational flexibility within the regime's broad principles.
	However, we take seriously the concern to ensure that, to quote the Constitution Committee,
	"a branch of government should not be empowered to enforce sanctions against a person who disputes the factual or legal basis of the action in question".
	We are therefore further considering the rights to redress in light of the committee's questions and will return at Report to present the final strategy to the House, with amendments if necessary. As I indicated, the Constitution Committee raised important questions in addition to that of a stay of proceedings. These relate to the absence of a right of appeal to an independent tribunal against certain notices, the opportunity to make representations before a notice is issued and the relationship between civil and criminal penalties. We are grateful to the committee for raising these important points, to some of which we responded last week.
	In our response to the committee, we made a commitment to give further consideration to appeal rights, employers' ability to make representations before statutory notices are issued, stay of proceedings where a review or appeal is under way and the regime's approach to criminal proceedings. We are keen to continue this dialogue to ensure a satisfactory conclusion for the committee. I understand that the exchange of correspondence with the committee is placed in the Library. If that is not the case, I shall ensure that it is. I apologise for not making sure that noble Lords were aware of that before this debate, but this is work in progress. The noble Lord's focus is consistent with the committee's position. We need to look at this and perhaps bring forward amendments.
	The noble Lord asked me about subsection (6)(b) and how substituting a different notice was different from confirming, varying or revoking a notice.

Lord Skelmersdale: I asked what the difference was between varying a notice and substituting a different notice, because if you vary one it is by definition a different notice.

Lord McKenzie of Luton: That is the point that I was trying to address. It seems to me that one example might be if one moved from an escalating penalty notice to a fixed penalty notice. That would involve substituting a different notice from the one that existed previously. Therefore, you are not confirming or varying that although you might be revoking it at the same time. I think that you could substitute something that was not a variation of the notice that previously existed. Therefore, I do not see how the noble Lord's problem arises, but I am not sure that we need to get too engrossed in that. However, on the substantive—

Lord Oakeshott of Seagrove Bay: Surely if a notice has an escalating penalty and you change that to a fixed penalty, that is varying it, is it not?

Lord McKenzie of Luton: We are getting into semantics. It is a different form of notice. In some circumstances it may be appropriate to substitute a new notice. For example, the regulator may issue a compliance notice for failure to auto-enrol an employee, but if that employee leaves while the notice is under review, the regulator may then choose to revoke the compliance notice and issue an unpaid contributions notice. Varying a notice might comprise changing the amount of unpaid contributions. There is a distinction, which we could debate for the next hour or so if we wished. However, in substance, the point made in the noble Lord's amendment chimes with the position taken by the Constitution Committee. We shall need to engage further with a range of issues and return to them on Report.

Lord Skelmersdale: I am grateful for that answer. I was questioning why it was necessary to include "vary" in subsection (6)(a), although I did not express it in those terms. I have still not received a particularly clear answer, with or without the intervention of the noble Lord, Lord Oakeshott. However, that was only a tiny part of what I was after. It is clear that the suspension of a notice while it is being reviewed is in suspension, if I may put it that way. Over the summer the Government will consider how they intend to respond to the Constitution Committee's suggestions and will come back with amendments on Report. I am extremely grateful for that and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendment No. 95 not moved.]
	Clause 38 agreed to.
	Clause 39 [References to the Pensions Regulator Tribunal]:

Lord McKenzie of Luton: moved Amendments Nos. 95A to 95D:
	Clause 39, page 19, line 10, after "may" insert ", if one of the conditions in subsection (1A) is satisfied,"
	Clause 39, page 19, line 13, at end insert—
	"(1A) The conditions are—
	(a) that the Regulator has completed a review of the notice under section 38;(b) that the person to whom the notice was issued has made an application for the review of the notice under section 38(1)(a) and the Regulator has determined not to carry out such a review."
	Clause 39, page 19, line 14, leave out subsection (2)
	Clause 39, page 19, line 26, at end insert—
	"( ) In section 103 of that Act (references to the Tribunal), after subsection (1) insert—
	"(1A) A reference to the Tribunal under section 39 of the Pensions Act 2008 must be made during such period as may be specified in rules made under section 102."
	( ) In subsection (2) of that section, at the end insert "or (1A)".
	( ) In Schedule 4 to that Act (constitution, procedure etc. of the Tribunal), in paragraph 7(5)—
	(a) the words from "under this Act" to the end become paragraph (a);(b) at the end insert—"(b) under section 39 of the Pensions Act 2008 or any provision in force in Northern Ireland corresponding to that section."
	( ) In that Schedule, in paragraph 13—
	(a) after "reference" (in both places where it occurs) insert "under this Act";(b) at the end insert—"(3) The Lord Chancellor may by regulations make provision about the award of costs and expenses by the Tribunal on a reference made under section 39 of the Pensions Act 2008 or any provision in force in Northern Ireland corresponding to that section.""
	On Question, amendments agreed to.
	Clause 39, as amended, agreed to.
	Clause 40 [Offences of failing to comply]:

Baroness Noakes: moved Amendment No. 96:
	Clause 40, page 19, line 34, leave out from "indictment" to "to" in line 35

Baroness Noakes: In moving Amendment No. 96, which seeks to amend Clause 40(2), I shall also speak to Amendment No. 97, which complements it. Since I tabled my probing amendments, the Government have tabled Amendments Nos. 97A to 97C, which take a diametrically opposite view to my amendments and therefore answer my probing questions to some extent, although not in the way that I had originally hoped.
	Clause 40 deals with various offences in relation to enrolment and opting in and subsection (2) provides for the penalties on conviction. On a summary conviction, there are fines. On a conviction on indictment, there is the possibility of imprisonment for up to two years, a fine or both. My amendment would remove the option of imprisonment for a conviction on indictment. I tabled this because these are offences committed by employers. For the most part employers will be corporate bodies and companies cannot be locked up, but a minority of employers will be individuals, whether sole traders or partnerships. These are typically small businesses and the individuals clearly could be locked up.
	My purpose in tabling my amendments was to ask what public policy objective was served by having the possibility of imprisoning employers only if they happened to operate in an unincorporated form, as this seemed to target small and unincorporated businesses. The government amendments, which I shall leave the Minister to explain in his own way, go a different route and bring company directors and others fully within the criminal provisions, including those related to imprisonment.
	We know that the Government think that the business world is populated by unscrupulous businesses, which are in turn manned by unprincipled directors and managers. Hence, they are accustomed to take the most draconian powers possible. Since this Government came to power, they have progressively introduced legislation, broadly in the format of Amendment No. 97B, which allows them to lock up directors and others even on the basis of mere neglect—not gross negligence or recklessness, only simple neglect.
	I therefore have a couple of sets of questions for the Minister about this form of offence. Will he say how often similar provisions—in other words, those based on neglect—have been used against directors in the past 10 years? How many directors have been imprisoned? The Minister's own department, for example, has introduced identical provisions for health and safety offences. Have they resulted in convictions followed by imprisonment?
	Secondly, will the Minister place on record the Government's understanding, in the context of the offences created by the Bill and his amendments, of the sorts of actions and omissions that will be likely to bring the new provisions into effect? What sort of conduct will amount to connivance? What will amount to neglect? Will neglect encompass a simple mistake? I beg to move.

Lord McKenzie of Luton: I thank the noble Baroness for the opportunity to discuss the principle of having an imprisonment option for those convicted of the new offence under Clause 40 and to speak to the government amendments.
	Where an employer wilfully fails to enrol or re-enrol jobholders into a qualifying pension scheme, those workers are losing out on the opportunity to save in a workplace pension with the advantage of an employer contribution. Given these serious consequences, the ultimate sanction for such non-compliance should be criminal prosecution. I stress that criminal prosecution will not be undertaken lightly. The regulator will have discretion over whether it is appropriate to bring about a criminal prosecution, and will generally use it only as a last resort. However, creating this offence will send a clear message to all employers that such behaviour will not be tolerated.
	We have proposed three amendments to clarify the provisions relating to this offence to ensure that prosecutions can be brought against a wide range of employers. The first amendment, Amendment No. 97A, is a minor technical amendment to the drafting of the limit for fines applicable on summary conviction. Consistent with the way in which penalties are expressed in other legislation, the amendment refers to a fine not exceeding the "statutory maximum", rather than to "level 5 on the standard scale".
	The second amendment, Amendment No. 97B, is a new clause designed to make responsible individuals in bodies corporate criminally liable for wilful breaches of the enrolment role. That deals directly with one of the points made by the noble Baroness about employers, if individuals, being sent to prison. Companies cannot be sent to prison, and the amendment extends the provision to people who as individuals in body corporates are responsible for wilful breaches of enrolment duties.
	In a similar vein, the third amendment, Amendment No. 97C, is a new clause that will allow for the prosecution of employers who are set up as partnerships. It allows penalties to be paid from a partnership's business funds and individual partners to be prosecuted. I am bound to say that this is a standard measure that brings the Bill into line with other legislation, such as the Gangmasters (Licensing) Act 2004. This is not unique. Together, this package of amendments ensures that the criminal offence provides a transparent and workable sanction of last resort.
	On Amendments Nos. 96 and 97, as I said earlier our compliance policy has been developed as a three-stage strategy: first, to educate and inform employers of their duties; secondly, to enable them to simplify and comply easily with their duties; finally, to enforce them. There are therefore a number of opportunities for employers to meet their duties, and the criminal sanction is very much the back-stop of our enforcement strategy. It is in line with the regulator's existing powers in the Pensions Act 2004, which includes the option of imprisonment for offences such as the intentional alteration or destruction of documents.
	Other regulatory regimes, such as those set out in the Companies Act 2006 and the Health and Safety at Work etc. Act 1974, also have the option of imprisonment. The noble Baroness recognised that. She asked how many times these sorts of provisions have been used and individuals imprisoned. I do not have the data for the past 10 years, but they have been used to prosecute individuals for health and safety offences, and individuals have been imprisoned. I will try to get the data for which the noble Baroness asked.
	Although our expectation is that the sanction will be rarely used, it is none the less an important deterrent. The new duties placed on employers are designed to ensure that millions of workers will have access to good-quality pensions savings, some for the first time. Failure to fulfil these duties therefore seriously jeopardises the retirement income prospects of these individuals. We need employers to take their responsibilities seriously. Given that the regulator will have powers to impose fairly large civil penalties, it is reasonable to suppose that employers who are unresponsive to these financial penalties may be similarly unresponsive to a fine imposed by a court. We therefore believe that it is right that an employer who "wilfully fails to comply" ultimately faces the possibility of imprisonment. I reiterate that our expectation is that the criminal sanction will be used rarely and only in the most serious of cases.
	The noble Baroness pressed me to put on the record my understanding of what "wilfully fails to comply" means. I am cautious about doing so, because I do not want to put on the record an off-the-cuff comment that might be seen as a point of interpretation. However, if someone wilfully fails to comply, it has the components of deliberately seeking not to comply and possibly persistently not complying. This is not a new term. It is around in legislation, and I am sure that there is an appropriate precedent as to how it should be interpreted.
	My note says that I hope this provides the noble Baroness with reassurance, and I ask her to withdraw the amendment. I suspect that it will not, but in any event I will move the government amendments in due course.

Lord Oakeshott of Seagrove Bay: Now that we have had the opportunity to hear the noble Baroness's and the Government's amendments, may I briefly say what the attitude of those on these Benches is about this?
	I quite agree with the noble Baroness that there should be no discrimination between large incorporated businesses and small individual employers, but it struck me that the government amendments deal with that fairly. I have heard what the Minister has had to say, and I think it is reasonable that there is ultimately a criminal sanction of last resort. By saying that, I in no way mean that most employers are trying to evade their responsibilities. I simply mean that we all understand—the noble Baroness with her great experience in accountancy will know this—that a small number of rogue employers do not play by the rules and that, if you think about it, an employer who persistently refuses to comply is ultimately stealing the employees' money by not having the money in the pension scheme that should be there. With the Minister's assurances, it is reasonable for there ultimately to be a criminal sanction.

Lord McKenzie of Luton: I thank the noble Lord for his support. I re-emphasise the point, which I hope I made, that the offence applies to a wilful breach of certain employer duties. An employer who does not comply because of genuine inadequacy will be extremely unlikely to be found guilty of wilfulness. The use of "wilful" ensures that if employers fail to fulfil their duties through haphazard administration or forgetfulness, they will not be criminalised under these provisions. It is important that we get that clear.

Baroness Noakes: The Minister focused his attention on the meaning of "wilfully". That was not what I asked him. I asked him what conduct would amount to connivance, and the meaning of neglect. What actions would constitute neglect to bring individuals within the ambit of this criminal offence? It is reasonable to ask the Minister at the Dispatch Box how the Government believe the offence will operate.

Lord McKenzie of Luton: The noble Baroness has quite properly posed some detailed questions. If I may, I shall reflect on them, write to her with some considered thoughts and expand on them rather than just try a definition from the Dispatch Box.

Baroness Noakes: I am extremely surprised that the Minister comes to the Committee to introduce amendments that will massively increase the possibility of individuals being sent to jail for offences in relation to the duties under the Bill when he cannot even explain what is meant by the matters specified in Amendment No. 97B. That is not an acceptable way for the Government to behave.

Lord McKenzie of Luton: Let me try again. "Neglect" covers wilful recklessness where the employer does not care. How is that as one definition? It seems clear enough.

Baroness Noakes: The Minister is clearly not even trying, so we will not make much progress today. I hear that the Liberal Democrats think that banging up company directors is also a good thing—

Lord Oakeshott of Seagrove Bay: That is beyond a joke. The noble Baroness knows very well that it is not what we said; it is not funny.

Baroness Noakes: I exaggerated for effect. The Minister gave examples, all of which have occurred in the last 10 years, of increasing criminalisation of directors. The Government always have a good reason for seeing potential criminal failure, which needs to be deterred or—

Lord McKenzie of Luton: I quoted the Health and Safety at Work etc. Act at the noble Baroness. That was 1974, so it was not created in the last 10 years.

Baroness Noakes: I believe that the formulation of the offence was put in subsequently and was not original, but we can test that.
	The Minister said that the Bill's massive financial penalties—we have just debated them; certainly, we on these Benches are not convinced about them—had to be matched by a commensurate criminal penalty. That makes us wonder whether the scale of penalties for what is non-observance of financial obligations to employees deserves the regime being set up to deal with potential non-compliance. The problem is that, whenever a regime is set up for what the Government say is just one or two bad employers, it can inevitably be used against a wider number, especially by overzealous officials in organisations such as the Pensions Regulator, which in the first instance would have control over financial penalties. We will need to think carefully about how the penalties in the Bill are constructed and whether they are fair and proportionate. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendment No. 97 not moved.]

Lord McKenzie of Luton: moved Amendment No. 97A:
	Clause 40, page 19, line 36, leave out "level 5 on the standard scale" and insert "the statutory maximum"
	On Question, amendment agreed to.
	Clause 40, as amended, agreed to.

Lord McKenzie of Luton: moved Amendments Nos. 97B and 97C:
	After Clause 40, insert the following new Clause—
	"Offences by bodies corporate
	(1) Subsection (2) applies where an offence under section 40 committed by a body corporate is proved—
	(a) to have been committed with the consent or connivance of an officer of the body corporate, or(b) to be attributable to any neglect on the part of an officer of the body corporate.
	(2) The officer, as well as the body corporate, is guilty of the offence and is liable to be proceeded against and punished accordingly.
	(3) "Officer" in this section means—
	(a) a director, manager, secretary or other similar officer, or(b) a person purporting to act in such a capacity.
	(4) Where the affairs of a body corporate are managed by its members, this section applies in relation to the acts and defaults of a member in connection with the member's functions of management as if the member were an officer of the body corporate."
	After Clause 40, insert the following new Clause—
	"Offences by partnerships and unincorporated associations
	(1) Proceedings for an offence under section 40 alleged to have been committed by a partnership or an unincorporated association may be brought in the name of the partnership or association.
	(2) For the purposes of such proceedings—
	(a) rules of court relating to the service of documents are to have effect as if the partnership or association were a body corporate;(b) the following provisions apply in relation to the partnership or association as they apply in relation to a body corporate—(i) section 33 of the Criminal Justice Act 1925 (c. 86) and Schedule 3 to the Magistrates' Courts Act 1980 (c. 43);(ii) section 70 of the Criminal Procedure (Scotland) Act 1995 (c. 46).
	(3) A fine imposed on a partnership or association on its conviction of an offence under section 40 is to be paid out of the funds of the partnership or association.
	(4) Subsection (5) applies where an offence under section 40 committed by a partnership is proved—
	(a) to have been committed with the consent or connivance of a partner, or(b) to be attributable to any neglect on the part of a partner.
	(5) The partner, as well as the partnership, is guilty of the offence and is liable to be proceeded against and punished accordingly.
	(6) Subsection (7) applies where an offence under section 40 committed by an unincorporated association is proved—
	(a) to have been committed with the consent or connivance of an officer of the association, or(b) to be attributable to any neglect on the part of an officer of the association.
	(7) The officer, as well as the association, is guilty of the offence and is liable to be proceeded against and punished accordingly.
	(8) "Officer" in this section means—
	(a) an officer of the association or a member of its governing body, or(b) a person purporting to act in such capacity.
	(9) "Partner" in this section includes a person purporting to act as a partner."
	On Question, amendments agreed to.
	Clause 41 [Offences of providing false or misleading information]:

Lord McKenzie of Luton: moved Amendments Nos. 97D and 97E:
	Clause 41, page 20, line 1, after "information)" insert—
	"(a) "
	Clause 41, page 20, line 2, at end insert—
	"(b) omit "or" at the end of sub-paragraph (iii)."
	On Question, amendments agreed to.
	Clause 41, as amended, agreed to.
	Clause 42 agreed to.
	Clause 43 [Requirement to keep records]:

Lord McKenzie of Luton: moved Amendment No. 97F:
	Clause 43, page 20, line 10, leave out "of this Part, or this Chapter" and insert "or 2 of this Part"

Lord McKenzie of Luton: These drafting amendments all flow from government Amendment No. 106A, which introduces a prohibition on employers inducing opt-out. The regulator will enforce that prohibition with the powers to investigate matters and, where necessary, to issue compliance and eventually penalty notices. There are a number of consequential amendments to provide for those enforcement powers.
	This group of amendments covers two areas. First, Amendment No. 103C updates the regulator's new objective to reflect its additional roles in maximising compliance with the measure and with the prohibition at Clause 49 on certain forms of recruitment conduct. Secondly, the remaining amendments change the structure of the chapters of Part 1, so that Chapter 2 focuses on the central enforcement powers of the regulator and a new Chapter 4 is created that covers supplementary provisions about compliance and information sharing. I beg to move.

Lord Skelmersdale: I am grateful to the Minister for agreeing to split the amendments from an earlier group, which was gigantic—that is the only word for it. However, I am still somewhat confused. The essence of the amendments is to move Clauses 43 to 48 to after Clause 57, which I assume means that they remain in Chapter 3. Perhaps I misunderstood what he just said; I heard him mention Chapter 4, but I could not understand in what connection. Why is it necessary to move them a bit later in the Bill?

Lord McKenzie of Luton: The purpose is to move the amendments to a new Chapter 4; subsequent chapters would obviously need to be renumbered. The benefit of that is to seek to concentrate in Chapter 2 the core issues around the Pensions Regulator's powers and the compliance that goes with them. The issues around records and information are collected separately under a new chapter. There is no greater logic than that, as I understand it; it is just a reordering and those provisions do not change.

Lord Skelmersdale: In that case, I must apologise to the Minister for not listening properly the first time round.

On Question, amendment agreed to.

Baroness Noakes: moved Amendment No. 98:
	Clause 43, page 20, line 16, at end insert—
	"( ) Notwithstanding anything provided in regulations under subsection (1), there shall be no requirement placed on any person to keep the records of a company which has been wound up."

Baroness Noakes: This is a small probing amendment. In Clause 43 there is a regulation-making power, backed up by criminal sanctions, allowing record-keeping periods of up to six years to be prescribed. I can completely understand the thinking behind that. The question posed by my amendment is: does that apply to the records of a company which has been wound up? I am not an expert in insolvency law, but I had understood that the records of a company which had been voluntarily wound up could be destroyed by the last liquidator of the company after one year. In a court winding up, the official receiver gives the authorisation on destruction at any time. That is provided by Regulation 16 of the Insolvency Regulations 1994.
	Could the Minister explain the relationship between the Bill and the Insolvency Regulations? Do the Government intend that the Secretary of State will override insolvency law and, if so, have the Government thought about the logistics for insolvency practitioners of keeping records for long periods after the dissolution of a company? I beg to move.

Lord McKenzie of Luton: Clause 43 will allow the regulator to request books and documentation from employers to demonstrate that they have complied with the new requirements. In addition, when the regulator is of the opinion that a person has failed to keep proper records, it will have the power to issue a civil penalty. Employers already keep records and documentation to illustrate that they are complying with legislative requirements. Therefore, very often the employer's own records will show one way or another whether it has complied with the requirements placed on it.
	The noble Baroness's amendment would mean that if a company wound up, the regulator would no longer be in a position to require the former employer to provide records to show that while trading it was complying with the employer duty. Similarly, former employees of the company that had been wound up would almost certainly be left in a position where they could not enforce their rights against their former employer, because there would be no legal obligation on the employer to produce the very records that would prove whether it had been compliant. It may also be possible for employers who have for some time been deliberately ignoring legal requirements and who fear the intervention of a regulator simply to wind up their companies and then reopen for business under a different name a short while later. This behaviour has been observed in relation to the national minimum wage requirements and it may well be seen again when the employer duty comes into force.
	On the specific question posed about the consistency of this with other legislation and whether it can be reconciled, there is some difficulty with it. Where an employer is wound up it effectively ceases to exist and may therefore not be covered by existing record-keeping requirements. It is effectively covered by the insolvency regulations, but these place a requirement on both liquidators and trustees to wait for one year before books and records can be destroyed. So I say to the noble Baroness that we need to think a little more about this and revert in due course. I do not believe that we have been fully able to cover and reconcile that inconsistency in the legislation. The point she raises is a good one and we need to take it away.

Baroness Noakes: I thank the Minister for that and look forward to hearing further how the Government intend to resolve the issue. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 43, as amended, agreed to.

Lord McKenzie of Luton: moved Amendment No. 98A:
	Transpose Clause 43 to after Clause 57
	On Question, amendment agreed to.
	Clause 44 [Powers to require information and to enter premises]:

Lord McKenzie of Luton: moved Amendment No. 98B:
	Clause 44, page 20, line 24, after "2008" insert "or section 50 of that Act"
	On Question, amendment agreed to.

Lord Skelmersdale: moved Amendment No. 99:
	Clause 44, page 20, line 36, leave out subsection (3)

Lord Skelmersdale: I would like to return to the issue of the extent of the powers being given to the Pensions Regulator by this chapter. Actually it is another chapter—but never mind, we will forget about that for the moment. Clause 44 amends the Pensions Act 2004 to extend the regulator's powers to enter premises to investigate compliance with this Bill.
	I accept that this clause does not actually add significant new powers to the regulator, because in the 2004 Act the regulator can enter premises to investigate compliance with the Welfare Reform and Pensions Act 1999, particularly the duty of employers to facilitate access to stakeholder pension schemes. Why that was not thought of originally in 1999, I have no idea, but I suspect that the noble Lord does not either. Clause 44 just allows them to enter to investigate compliance with relevant parts of this Bill.
	This seems a good opportunity to probe how the Government intend the regulator to police employers' compliance. Do they expect the majority of investigations to be sparked by jobholder complaints or, perhaps, rather ominously, by Her Majesty's Customs and Revenue? How many investigators does the Pensions Regulator have now and how many extra does the Minister anticipate will be necessary to ensure compliance with auto-enrolment? I beg to move.

Lord Oakeshott of Seagrove Bay: In this context, can the Minister confirm that "premises" will mean only business premises and not someone's home?

Lord Tunnicliffe: Where the regulator is of the opinion that an employer is not or may not be complying with its new duties under Chapter 1 of the Bill, it will need the power to conduct further investigations. It is important that regulators in whatever field have the power to conduct necessary investigative work. For example, HMRC's inspectors have the power under Section 14 of the National Minimum Wage Act to require employers to produce records and to enter employers' premises where necessary in the course of their investigation.
	Section 74 of the Pensions Act 2004 gives an inspector appointed by the regulator the power to enter premises for the purpose of investigating whether an employer is complying with certain legal obligations relating to pension provisions. Clause 44 extends Section 74 of the 2004 Act to give an inspector the power to enter premises to investigate whether the employer is complying with the new legal obligations the Bill creates in Chapter 1, Part 1.
	The noble Lord's amendment would leave inspectors with the power to enter premises in the course of investigating, say, apparent irregularities of payments to pension schemes—the 2004 Act gives them that power—but to deny them that power in relation to the new duties created in the Bill, matters such as the requirements to automatically enrol eligible jobholders and calculate contributions accurately, and so on. That would seem a serious omission given the importance that we attach to saving for retirement and our commitment to helping low and medium-earning workers to provide for their old age.
	I do not expect the power to enter premises to be used lightly. We expect the great majority of employers to comply fully with the new requirements, and many, if not most, of those who do not will have done so inadvertently and will put matters right as soon as their errors are pointed out. However, there may well be cases in which workers have raised concerns about the employer's behaviour or its administration of the scheme, or where an inspector had good reason to suspect that an employer may be giving false or misleading information. In those circumstances a visit by an inspector may be necessary to resolve any concerns.
	We are aware that some employers operate their business from their home address, and we expect that inspectors will take this into account when they plan to visit employers' premises. The power of inspection will not apply where a dwelling house is not used for the purpose of trade or business. I hope the noble Lord is reassured by those explanations.
	As for the general procedures by which compliance with the Act will be verified, the Act gives the regulator power to have large amounts of information, for example from HMRC. That sort of information will carry the great burden of ensuring compliance, and the power to inspect premises will rarely be used.

Lord Skelmersdale: It seems that I am not the only one whose attention slips during a long and warm afternoon. I asked the Minister whether he expected the majority of investigations to be sparked by the jobholder or by HMRC. He did not tell me which he thought was the most likely. Secondly, I asked how many investigators the Pensions Regulator has now and how many extra he expects the regulator to need. I think that those are perfectly reasonable and sensible questions.

Lord Tunnicliffe: They may be perfectly reasonable and sensible questions but they are not in my brief. I am being briefed to react to the issue of entering premises and using investigative powers. We anticipate that the investigation of premises by the regulator will arise primarily from whistleblowing complaints; that is, where an individual has alerted the regulator to a potential instance of non-compliance.

Lord Skelmersdale: I am reminded of a late noble Lord who was on the opposite Front Bench for some years. He had a cleft palate and was wont to say, "Not in my bweef, my Lords", which is exactly the same response as we have had from the noble Lord, Lord Tunnicliffe. At some point, please may I have a letter from one Minister or the other to say how many investigators the Pensions Regulator has now? I still think that that is a perfectly reasonable question but it is quite clear that I will not get an answer tonight so I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Tunnicliffe: moved Amendment No. 99ZA:
	Clause 44, page 20, line 38, leave out from "employer" to "at" in line 39 and insert "is contravening, or has contravened—
	(a) any provision of, or of regulations under, Chapter 1 of Part 1, or section 49 or (Inducements), of the Pensions Act 2008, or(b) any corresponding provision in force in Northern Ireland,"
	On Question, amendment agreed to.
	[Amendments Nos. 99A and 99B had been withdrawn from the Marshalled List.]

Lord Tunnicliffe: moved Amendment No. 100:
	Clause 44, page 21, line 3, leave out "employees of the employer are employed" and insert "the employer employs workers"
	On Question, amendment agreed to.

Lord Tunnicliffe: moved Amendment No. 100A:
	Clause 44, page 21, line 8, at end insert "or under any corresponding provision in force in Northern Ireland"

Lord Tunnicliffe: I have tabled government amendments to Clause 44 to create consistency between the entry and inspection powers in the Bill and the corresponding provisions in the Pensions Act 2004.
	Section 74 of the 2004 Act gives an inspector appointed by the regulator the power to enter premises, liable to inspection, for the purpose of investigating whether an employer has complied with the stakeholder pension requirements under the Welfare Reform and Pensions Act 1999 or any corresponding provision in force in Northern Ireland.
	The Bill puts in place new duties on employers, and we may expect that from time to time inspectors will need to enter and inspect premises to ensure that employers are complying with the requirements. Amendments Nos. 100A and 101AA will allow an inspector to enter premises to check whether an employer is complying with the duties in Chapter 1 or with the corresponding Northern Ireland legislation, or both.
	Again, with a view to ensuring consistency between certain clauses of the Bill and other legislation to which they relate, I have introduced amendments to Clause 121. This clause extends Chapters 4 and 5 to Northern Ireland. The first amendment extends the interpretations of terms defined in Clause 86 to Northern Ireland where the terms relate to Chapters 4 and 5 of the Bill. The second amends the extent provision in this Bill to recognise that Clauses 46 and 47 and paragraph 9 of Schedule 8 have the extent specified within them. I beg to move.

Lord Skelmersdale: When I was a junior Minister in the Northern Ireland department, it was made clear to me that the Province was very keen to hang on to its own statute book. That also applied to some social security legislation, which, although it paralleled what was going on in the rest of the country, was not absolutely identical. It occurs to me to ask the Minister whether this position still exists or whether some sort of Northern Ireland order will accompany this legislation, when enacted.

Lord Tunnicliffe: I am sorry; I do not have the answer to that question and it would be wrong of me to try to guess it.

On Question, amendment agreed to.

Lord Tunnicliffe: moved Amendment No. 101:
	Clause 44, page 21, line 13, leave out ""employee"" and insert ""worker""
	On Question, amendment agreed to.
	[Amendment No. 101A had been withdrawn from the Marshalled List.]

Lord Tunnicliffe: moved Amendment No. 101AA:
	Clause 44, page 21, line 16, at end insert—
	"(D1) In the application of subsections (A1) and (B1) in relation to any provision mentioned in subsection (A1)(b) (a "corresponding Northern Ireland provision"), references in those subsections to "employer", "worker" or "qualifying scheme" are to be read as having the meaning that they have for the purposes of the corresponding Northern Ireland provision."
	On Question, amendment agreed to.
	Clause 44, as amended, agreed to.

Lord Tunnicliffe: moved Amendment No. 101B:
	Transpose Clause 44 to after Clause 57
	On Question, amendment agreed to.
	Clause 45 [Disclosure of tax information etc]:

Lord Skelmersdale: moved Amendment No. 102:
	Clause 45, page 21, leave out lines 30 to 33

Lord Skelmersdale: I hope that the Minister—whichever one is to answer—will regard this as a simple probing amendment. Its intention is to establish what sort of co-operation the new subsection at lines 30 to 33 on page 21 will establish. In what circumstances will Her Majesty's Revenue and Customs provide information to the regulator? Will the regulator have to ask specifically if there is evidence of an employer avoiding other obligations, such as compliance with the national minimum wage, or will HMRC spontaneously offer up names of employers whom they consider worth investigating? I note what the Minister said earlier about complaints coming from both HMRC and jobholders, although the majority would appear to be from jobholders.
	If HMRC spontaneously offers up these names, will there be clear guidance on when information should be offered or will it be entirely ad hoc and dependent on individual HMRC officers who remember that another government body may be able to use the information?
	I should also like to explore the effectiveness of these growing interorganisational relationships. I recently discussed a similar partnership between HMRC and the Child Support Agency, where a plan to allow for the secondment of officials between bodies looked worthwhile on paper but entirely failed to reached its potential in practice. Is anything similar planned in this instance and, if so, what steps will the Government take to ensure that these secondments are more effective? I beg to move.

Lord McKenzie of Luton: This amendment would disable the new provision for HMRC to share information with the Pensions Regulator for compliance purposes and it would eliminate existing data-sharing arrangements between the two. I understand that that is not the import of the amendment but I thank the noble Lord, Lord Skelmersdale, for giving us the opportunity to discuss this matter.
	I am aware that lapses in data security in recent months have rightly caused great anxiety and wish to reassure noble Lords that we share that concern. I should like to explain why the data-sharing provided for in Clause 45 is vital and outline the steps that we are taking to ensure that the transfer and storage processes will be protected by the highest standards of data security.
	HMRC, through its PAYE responsibilities, is the only holder of a comprehensive UK employer database. These data will allow the regulator to communicate with employers about their new duties and to run a registration process requiring employers to state how they will meet their new responsibilities. Without registration, compliance with the employer duties would be much lower, and millions could be denied access to pension saving. In addition, this subsection is designed to allow HMRC to share information about non-compliance which it has collected through tax and national minimum wage activities. This will help the Pensions Regulator to identify which employers are more likely not to comply with their new duties. Finally, the clause replaces the regulator's existing gateway to exchange data with HMRC, which is crucial to the regulator's ability to deliver its existing functions.
	It is of course vital to ensure that data are transferred safely and securely. The Bill, and Clause 47 in particular, strengthens the legal safeguards of data shared by HMRC by increasing the maximum sentence that a magistrate can impose on Pensions Regulator staff who unlawfully disclose restricted data. This sanction also applies to anyone who unlawfully discloses restricted data which they have received from the Pensions Regulator.
	The noble Lord referred to secondments or transfers between departments, which we discussed to some extent during the passage of the Child Maintenance and Other Payments Bill. There may well be arrangements for people to be seconded from one department to another, but when individuals arrive in a transferee department, they will be subject to the same procedures, processes and systems as any other employee in that department. The fact that they may have come from another department does not matter. They may bring expertise and experience with them, but this is not meant to be a loop round what should be a formal gateway.
	The noble Lord also asked how the arrangement will work, particularly in relation to information related to non-compliance with the national minimum wage. The data-sharing arrangements have yet to be operationally finalised, but the clause will allow HMRC to provide the regulator with information regularly about employers who are not complying with other legislation. That could be at the request of the regulator or on HMRC's initiative. Clearly, this needs to be formalised and procedures need to be set up. The key point is that that information flows on a structured basis and that it is protected. I hope that enables the noble Lord to withdraw his amendment.

Lord Skelmersdale: This is obviously a recurring theme of mine. I am worried that to a great extent transferees have to have a form of amnesia as regards their previous employment. However, I shall not go into that matter tonight.

Lord McKenzie of Luton: I do not think that was what I said. That misunderstanding may be running over from the previous legislation that we discussed. Transferring individuals between departments does not mean that they do not bring with them their expertise, knowledge and experience, which could well be brought to bear and made good use of. My point was that, simply because they come from another department, there should not be informal transfers of information and loops back to that department. The gateways are there on a statutory basis for very good reasons. Transferees or secondees, just like any other employee of the Pensions Regulator, will be subject to the same processes and procedures.

Lord Skelmersdale: By using the word "amnesia" I meant that, if a particular individual who has just been transferred from Revenue and Customs has been looking at an employer's account and it needs to be looked at again, he has to go back through the proper channels to be effective. I will not get into that argument now. I am grateful to the Minister because I think I have had an answer to my question, which is the spontaneous offering-up of names by HMRC. Of course it has the biggest database, if it does not lose it. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 45 agreed to.

Lord McKenzie of Luton: moved Amendment No. 102A:
	Transpose Clause 45 to after Clause 57
	On Question, amendment agreed to.

Lord Tunnicliffe: I beg to move that the House do now resume. In moving the Motion, I suggest that the Committee stage begin again not before 8.33 pm.

Moved accordingly, and, on Question, Motion agreed to.
	House resumed.

Sexual Offences (Northern Ireland) Order 2008

Lord Rooker: rose to move, That the draft order laid before the House on 30 April be approved.

Lord Rooker: My Lords, I apologise in advance for the length of my speech during what is dinner break business.
	The order was laid before the House on 30 April. While the main focus of my opening speech will be on this order, I am pleased that we can also debate the Sexual Offences (Northern Ireland Consequential Amendments) Order 2008 at the same time. As we move towards the devolution of policing and justice powers in Northern Ireland, I certainly hope that this will be the last time that this House is asked to consider major criminal justice legislation for Northern Ireland through the Order in Council procedure. In future, that will quite rightly be a job for the Northern Ireland Assembly. In the mean time, as we have always said, business should continue in the interests of the people of Northern Ireland, so I make no apology for bringing forward the order. The order has already been considered in the other place.
	The draft Sexual Offences (Northern Ireland) Order 2008 is the result of the first ever fundamental reform and consolidation of the law on sexual offences in Northern Ireland. Many of the current statutes governing Northern Ireland date not from the last century but from the 19th century and are difficult to apply to current circumstances. For some time we have recognised the growing need for a strengthened, modernised and harmonised body of law based on the Sexual Offences Act 2003.
	The draft legislation was preceded by a comprehensive review of the law. The Government sought views from key stakeholders and others in Northern Ireland on how the law should distinguish for the 21st century between acceptable sexual behaviour and criminal activity. The review took as its starting point the extensive research and findings of the fundamental review of the law on sexual offences that was carried out in England and Wales, as well as the parliamentary scrutiny of the 2003 Act. Essentially, we took the view that unless there was a good reason, the law in Northern Ireland should, as far as possible, match that in England and Wales. That is a common theme throughout many of the changes in the legislation.
	The proposed order will update the law. All offences will be gender neutral and, in the main, consensual sexual activity between adults in private will not fall within the criminal law. The order will strengthen and modernise sexual offences, primarily to ensure that all non-consensual sexual activity and sexual activity involving children and other vulnerable people is criminalised and will attract appropriately robust sanctions.
	It will provide for clearly defined offences, which should ensure that anyone who engages in non-consensual or unacceptable sexual activity will face justice and appropriate punishment. More importantly, children and young people are at the centre of the proposals, with new offences designed to protect the most vulnerable and to punish severely any perpetrator of child sexual abuse.
	The consultation on the order has been thorough. A policy consultation was carried out in 2006. A proposed draft sexual offences order was prepared and consulted on from November 2007 until February 2008. Altogether there were 369 responses to the legislative proposals, including 29 from organisations, political parties and elected representatives. The remaining number were from individuals responding in a personal capacity, and they focused mainly on one aspect, the proposal to change the age of consent from 17 to 16.
	The Northern Ireland Assembly established an ad hoc committee of all of the main Northern Ireland political parties to consider the draft order. My honourable friend the Minister for Criminal Justice in Northern Ireland has already recorded, as I do tonight, his gratitude to the members of that committee for their careful scrutiny.
	While the age of consent issue has provided some difference of opinion, there has been strong support for the order as a whole. The Northern Ireland Assembly not only affirmed its support for the sweep of the legislation, but welcomed the increased sentences and the move to gender neutrality. The Northern Ireland Commissioner for Children and Young People and the Police Service of Northern Ireland welcomed the contents of the order. The major children's organisations, such as the National Society for the Prevention of Cruelty to Children and Barnardo's, were also generally supportive, along with Brook and the Family Planning Association.
	It may help noble Lords if I briefly run through what is proposed in the legislation. There is a clear focus on five different themes: non-consensual offences, offences against children, offences against those with a mental disorder, prostitution and other unacceptable sexual behaviour. The core offences that rely on the absence of consent are set out in Part 2. They include a new statutory offence of rape to replace the common-law offence, and new serious offences of assault by penetration and causing a person to engage in sexual activity without consent.
	The new offence of rape has been expanded to include oral penetration, and the offence of assault by penetration carries a maximum life sentence for behaviour that under the current law would be classed as indecent assault with a maximum sentence of only 10 years. We propose the same statutory definition of consent as exists in England and Wales, with a number of evidential presumptions that consent was absent unless evidence is provided to the contrary. For example, if violence was used or threatened, there would be a presumption that consent had not been given.
	On the second major element of the legislation, the new framework of offences against children is set out in Part 3. The most important issue in that regard is that where an offence is committed against a child under the age of 13, there is no requirement to address the issue of consent. That follows the Sexual Offences Act 2003 and makes it clear that there can be no question about the capacity of a child under the age of 13 to agree to sexual activity. Penetration of a child aged 12 or under will always be classified as rape.
	The next group of offences concern children under 16 and criminalises all sexual activity with children and young people under that age. The maximum sentence for that group of offences is 14 years, although where the offence is committed by someone under 18, the maximum sentence is reduced to five years. By comparison, the current offence in Northern Ireland of unlawful carnal knowledge criminalises only sexual intercourse, and the maximum sentence for unlawful sexual intercourse with a girl aged 14 to 17, regardless of the age of the other party, is only two years. Indeed, there is no specific offence by which it is unlawful for a girl or woman to have sexual intercourse with a boy under 17.
	The third group of offences applies to young people under 18. The aim is to provide a safety net against exploitation and abuse. For example, it will continue to be unlawful to have sexual activity with a young person under the age of 18 for anyone in a specified position of trust or in a specified family relationship. It will be unlawful to pay for the sexual services of a child under 18, or to cause, incite or arrange for a young person to become involved in prostitution or pornography and to control that person. Finally, the age under which it will be illegal to make, take, possess or distribute indecent photographs of children will be increased to 18.
	Part 4 of the order, relating to offences against other vulnerable groups, sets out the circumstances in which it will be illegal to engage in sexual activity with a person who has a mental disorder. There are three clear aspects to those offences. The first relates to those with more severe disabilities and will penalise any sexual activity with someone who lacks the capacity to choose because of a mental disorder, or who is unable to communicate such a choice. The second deals with the procuring of sexual activity with a person with a mental disorder by inducement, threat or deception. The third simply outlaws any sexual activity by a care worker with a person with a mental disorder. These offences increase the range of offending behaviour against this particularly vulnerable group, while still acknowledging the rights of many such individuals to a consensual and non-exploitative sexual relationship.
	Part 5 contains provisions to address the problems of kerb crawling and soliciting for prostitution, which occur to some degree in all of our major cities, Belfast being no exception. The police have pressed for these provisions. We are also sending a further message to those engaged in commercial sexual exploitation, with sentences of seven years for causing, inciting and controlling prostitution and for keeping a brothel.

Lord Tebbit: My Lords, I wonder whether the Minister can help me. As I read it, Part 5, like the rest of the order, is in gender-neutral terms. Yet at page 22 of the Explanatory Memorandum, it is stated:
	"The reference to 'sexual services' would cover someone who controls the activities of a number of women in prostitution".
	Am I reading the order wrongly, or is the Explanatory Memorandum slightly misleading?

Lord Rooker: My Lords, that is a very fair question because, obviously, it can be the other way round. I will get an answer before the evening is over, because it is intended to be gender-neutral as regards the practicalities of the law. However, the idea that there cannot be prostitution the other way is completely nonsense. I will get an answer to the noble Lord and I am grateful for the question.
	Part 6 contains a miscellaneous but important group of offences. It criminalises acts where the clear intention is to commit a sexual offence; for example, giving someone so-called date rape drugs. It also criminalises sex with an adult relative, and it lists other behaviours considered unacceptable; namely, exposure, voyeurism, intercourse with an animal, sexual penetration of a corpse and sexual activity in a public toilet.
	Part 7 makes further important provisions. It allows offences committed overseas against children to be pursued by the courts in Northern Ireland, whether or not they are offences in that other country. It also removes offences against children committed by other children or young persons from the reporting requirements of the Criminal Law Act 1967, although the Government have agreed not to commence that provision until new safeguarding legislation is enacted—we hope in 2009.
	As I said earlier, there was an impressive and largely supportive response to the Government's consultation on the order. The Government set out their response to the issues raised in a statement, which contained a summary of the representations that accompanied the order when it was laid before Parliament. A further document contained a summary of the changes made to the order; for example, the Government have agreed to look further at the possible inclusion of sports coaches within the positions of trust listed in Article 28. We will ask the Minister for Culture, Arts and Leisure to consult sports bodies in Northern Ireland on that suggestion. We have also agreed to consult on guidance and to look at ways to engage with children and young people on the introduction of the new law.
	As regards the subject of the noble Lord's amendment, however, the Government have not been persuaded to raise the age from 16 to 17 for the purposes of the offence of sexual activity with a child, more commonly referred to as the "age of consent". Our policy position remains that we have not seen any compelling evidence to suggest that the criminal law in Northern Ireland should continue to be at variance with the rest of the United Kingdom on this issue.
	Much of the argument against the move to harmonise the law has come from a basic misunderstanding of what the term "age of consent" means. It does not set in law the age at which it is deemed appropriate to start sexual activity. We are setting out the circumstances in which it is an offence to engage in sexual activity with a young person, even though that young person gives their consent. If that young person is 14 or 15, it remains an offence for another person to engage in sexual activity with them. We say that at 16, a young person has a right to take responsibility for their decisions and the other person should not be criminalised as a result. It is important to underline that the focus for the criminal law is not the conduct of the person below the age of consent; it is the conduct of the other person.
	We believe that a majority of young people from the age of 16 will make sensible decisions, supported particularly by parental guidance, as well as by sex education in schools and the work of statutory and voluntary organisations that influence young people. Sixteen is the age throughout the whole of the United Kingdom at which, with parental consent, marriage can take place. That is not affected. I understand that is the position in the Republic, even though the age of consent is 17. There is a history about why the age of 17 was chosen which other noble Lords are far better qualified to know the detail about than I.
	We are supported in the view we have taken by all the major children's organisations: the NSPCC, Barnardo's, the Children's Law Centre and the Northern Ireland Commissioner for Children and Young People, by numerous representatives of social care trusts and by MLAs, including the chairman of the Assembly's ad hoc committee that considered the order in detail. I full accept that the committee was not unanimous, but that is not the point. The chairman, Dr Stephen Farry, said in the debate in the Assembly:
	"My view is that the age of consent in Northern Ireland should be set at 16 years of age and be in line with the rest of the United Kingdom. I do not believe that there is a compelling reason for Northern Ireland to be out of line with the rest of the UK".
	The focus of my speech has been the main order. I shall briefly address aspects of the other order. The draft Sexual Offences (Northern Ireland Consequential Amendments) Order is, by and large, a short, technical piece that allows the main order and the Sexual Offences Act 2003 to work together in a UK context. It also amends the list of offences that attract the sex offender notification requirements of Part 2 of the Sexual Offences Act 2003 and adds the new offences to the Criminal Justice Act 2003 for the purposes of sentences for public protection.
	The answer to the question asked by the noble Lord, Lord Tebbit, is that the Explanatory Memorandum is seeking only to give an example. The offence is gender neutral and would apply equally to male prostitutes. I assumed that that would be the case, but sometimes the his and the her and the he and the she make it look as if it is not gender neutral, but it is.
	I am pleased to bring before the House this fundamental reform of the criminal law on sexual offences in Northern Ireland. I make no apology. This has been in being for a considerable number of years. We see no reason to delay the implementation of the many new offences and penalties I have spelt out while awaiting the further devolution that we fully expect to take place. Then it will be up to the Northern Ireland Assembly. The new framework of sexual offences is about better protection for all against unacceptable sexual behaviour. It will improve protection for children, young people and other vulnerable groups against sexual abuse, and it will help to tackle prostitution and commercial sexual exploitation. I commend both orders to the House.

Moved, That the order laid before the House on 30 April be approved. 19th Report from the Joint Committee on Statutory Instruments, 19th Report from the Merits Committee.—(Lord Rooker.)

Lord Morrow: rose to move, as an amendment to the Motion, to leave out from "that" to the end and insert "this House declines to approve the draft order laid before the House on 30 April because of opposition in Northern Ireland to lowering the age of consent".

Lord Morrow: My Lords, it may be wondered why a Member of this House should rise to oppose an Order in Council, an instrument normally considered non-controversial. Yet any non-controversial features of this legislation are overshadowed by one extremely contentious provision: the proposal to lower the age of consent for sexual activity in Northern Ireland from 17 to 16. The age of consent in the criminal law is a powerful expression of what a society believes is best for its young people. Northern Ireland has chosen to set that age at 17 since 1950 and today most of its politicians and the majority of its people want to keep it at 17. Noble Lords may know that the Merits Committee drew the special attention of the House to the order in its 19th report, which was published on 13 May, noting that the Assembly and other consultees were broadly in favour of the legislation but opposed the lowering of the age of sexual consent from 17 to 16.
	I shall elaborate. According to normal consultative procedure, the legislation was scrutinised by an ad hoc committee of the Northern Ireland Assembly. After receiving written and oral evidence from interested bodies, the committee presented a report to the Assembly. The report included the statement that,
	"the Committee strongly recommends that there be no change to the current age of consent of 17".
	In February, the Assembly voted unanimously to submit the report to the Secretary of State as a report of the Assembly. No Division was required. Shortly after that vote, the MLAs tabled a no day named motion calling on the Secretary of State to retain the age of consent at 17. To date, it has been signed by 57 MLAs from across the political spectrum, unionists and nationalists alike. That makes it the best supported no day named motion of the current Assembly and the only one to achieve an overall majority of Members. It is clear that the Assembly would never have passed legislation lowering the age of consent.
	Stormont's position reflects that of the Northern Ireland populace. A ComRes poll in March found that 73 per cent of Northern Ireland's citizens, including 80 per cent of Protestants and 72 per cent of Roman Catholics, opposed any reduction in the age of consent. Such widespread opposition was reflected in public comments from church representatives, the Northern Ireland rape crisis centre, the Province's biggest youth organisations, the Boys' Brigade and the Girls' Brigade, and Love for Life, a relationship and sexual education project that delivers programmes to more than 20,000 young people annually. The Northern Ireland Office's analysis of the public consultation reveals a similar pattern. Of 369 responses received, only seven specifically supported the age of consent proposal; 346 responses specifically opposed it.
	The Government have put forward such a controversial provision in a statutory instrument that cannot be amended, leaving us with no choice but to reject the order. I shall test the opinion of the House at the conclusion of this debate. It is right to ask the Government to think again on such an important issue. Even now, it would not be difficult to withdraw the order, amend it and relay it before Parliament. There are precedents for this House rejecting statutory instruments—for example, the Greater London Authority (Election Expenses) Order 2000 and the Gambling (Geographical Distribution of Casino Premises Licences) Order 2007.
	Let me at this point respond to a question that has been raised: is there not a contradiction between an age of consent set at 17 and allowing marriage at 16? No. Marriage is clearly a special institution. This has never caused a problem in the past 58 years. When Stormont raised the age of consent to 17 in 1950, it included an exception for married couples. It is crucial that marriage at the age of 16 or 17 in Northern Ireland can take place only with parental consent. The unique status of marriage is demonstrated by the fact that several other provisions in the order—for example, the abuse of trust laws—include exceptions for married couples.
	To date, the Northern Ireland Office has offered only the scantiest justification for lowering the age of consent. The only reason offered to the Stormont committee and the Merits Committee was consistency across the United Kingdom. The logic of that argument is contrary to the principle of devolution. We are left asking why the Government continue to support devolution if they believe that the laws in every part of the United Kingdom must always be the same. In laws covering, for example, abortion, employment, public order and alcohol licensing, Northern Ireland has long differed from the rest of the United Kingdom. Moreover, the Northern Ireland Office has not provided evidence of any legal difficulty caused by the inconsistency of the age of consent.
	Ministers have attempted to justify the policy by citing the need for clarity in the minds of young people. By calling for clarity, Ministers appear to believe that there is widespread confusion among Northern Ireland's young people because the age of consent is 16 elsewhere in the United Kingdom. The fear has also been expressed that a legal age of consent of 17 deters young people from seeking sexual health advice because they feel that they will be criminalised in some way.
	How can Northern Ireland's young people be deterred from seeking sexual health advice under the age of 17 if they are all confused by the law and think that the age of consent is 16 anyway? In fact, any teenager from Northern Ireland or elsewhere will not have to look too far to find that the age of consent in the Province is 17. Just about every teenage website offering sexual health advice spells out the law and its implications in unmistakable terms. Moreover, the basic framework of the laws governing sexual activity is routinely spelt out in school classes in Northern Ireland.
	The age of consent renders sexual activity with a person below that age a criminal offence. A young person under the age of 17 in Northern Ireland has only to prove in a criminal trial that an incident of undesired sexual activity took place to establish a criminal act. They do not have to prove under cross-examination that they did not consent. That is crucial. We all recognise that young people can be vulnerable to manipulation in sexual matters and may well grant apparent consent to intercourse only to recognise the manipulation later and regret the act. Other elements of the draft order, such as Articles 38 to 42, acknowledge that by extending further legal practices to 17 year-olds, such as protections from sexual exploitation for the purposes of prostitution and pornography.
	In its drive for legal uniformity, the Northern Ireland Office seems to have forgotten that Northern Ireland is the only part of the United Kingdom to share a land border with another state. The age of consent in the Republic of Ireland is 17. That is relevant to any debate about the age in the north. Let us not deceive ourselves. Sexual predators of whatever age living in the Republic would certainly perceive a lower age of consent across the border as a signal that 16 year-olds there are fair game.
	Any law restricting the behaviour of young people is intended to protect them from the possible unintended consequences of their actions, whether that restriction relates to driving, smoking, bearing knives or having sex. Regardless of the Government's intention, lowering the age of consent will act as an encouragement to young people to engage in sexual activity at a younger age. If the driving age limit were lowered from 17 to 16, we can be sure that many more 16 year-olds would take to the roads. Just because some young people already engage in sex at ages younger than the age of consent does not mean that the law has no positive effect. Some young people also break the law in relation to smoking and alcohol, but we knowledge the necessity of such laws for deterring the majority.
	Comparing sexual behaviour in Northern Ireland with that in the rest of the United Kingdom clearly shows the value of Northern Ireland's current age of consent. Only 15 per cent of young people in Northern Ireland engage in sex before 16, compared with 28 per cent in Great Britain. I do not suggest that Northern Ireland's higher age is solely responsible for the lower rates of teenage sex, but in terms of legislation affecting teenage sexual behaviour it is the single most obvious difference between the two areas.
	By encouraging young people to delay engaging in sex until 17, Northern Ireland's current age of consent benefits them. They are safer. The statistics bear that out. The rate of conception among 16 year-old girls in England and Wales is almost two and a half times higher than that in Northern Ireland. The rate of sexually transmitted infection among under-16s is also two and a half times higher in England and Wales than in Northern Ireland. The Government may be unable to see any correlation between the age of consent and the prevalence of sexual diseases among young people, but the people of Northern Ireland certainly do.
	The proposal in the order to lower the age of consent in Northern Ireland is extremely unpopular. This is not isolated posturing from obscure and self-appointed guardians of public morals; this is comprehensive opposition from every field and strata of society and, most significantly, from across the political and religious divide. I beg to move.
	Moved, as an amendment to the Motion, to leave out from "that" to the end and insert "this House declines to approve the draft order laid before the House on 30 April because of opposition in Northern Ireland to lowering the age of consent".—(Lord Morrow.)

Lord Waddington: My Lords, if indeed it be the case that the people of Northern Ireland do not wish the age of consent to be reduced from 17 to 16, it is a serious matter that we should be thrusting that change on them. I want to make one simple point. I took great cheer from what the Minister said. It is often said—I have heard it said in this place—that the age of consent laws are an awful nuisance for young people and it is not the business of the law to make life difficult for them. The Minister made it plain that that is complete nonsense and a complete misunderstanding of the purpose of age of consent laws. They are there simply to protect young people from adults who might be minded to prey on them. When the age of consent is reduced, that protection is diminished and the rights of potential predators are extended. Clearly, people in the Province do not want that protection for young people to be reduced; they do not want the right of potential predators to be extended. I think that we should pay great regard to their wishes.

Lord Glentoran: My Lords, I thank the Minister for bringing forward the statutory instrument tonight and I note the amendment moved by the noble Lord, Lord Morrow. The major part of the statutory instrument is for the protection of children and young people. That is its most important role. A lesser but, for me, an equally important role is, as the Minister said, that it is once again bringing Northern Ireland into line with British law. We have a huge travelling public—young people, middle-aged people and children—going backwards and forwards. To have two different laws in something that is so important to the social lives of travelling young people has to be harmful and unhelpful to those young people.
	I am not going to take part in the argument about the moral story advanced by the noble Lord, Lord Morrow, and others who think similarly. However, I wonder why Her Majesty's Government have chosen this time to bring this provision in the statutory instrument into your Lordships' House and into this Parliament. As the Minister said, we are all hoping that at some stage in the not-too-distant future—although it seems to be getting more distant at the moment—there will be devolution of criminal justice and policing to Northern Ireland. That is when such difficult matters, on which the people of Northern Ireland clearly have strong views that differ from the views of the population of this country, should be widely debated publicly in their Assembly. The Assembly should have been given that opportunity with the part of the instrument referred to in the amendment of the noble Lord, Lord Morrow, although not the rest of the order.
	It is a shame that the Government were arrogant enough, knowing the volume of concern, if not antagonism, in the Province not to have just left it out for another day. If we are all lucky and it all goes as we would like it to go, that other day might not be very far away. However, because I am not happy about that issue and because I took part in the major debate on lowering the age of consent in Great Britain in your Lordships' House a year or two ago, I do not intend to vote in this debate. I am very sorry that the Government have felt the need to put a serious Whip on this issue tonight.

Lord Smith of Clifton: My Lords, I understand what the noble Lord, Lord Glentoran, is saying, although I cannot quite follow his logic. First, he says that it is going to be some time off before criminal justice is repatriated to Northern Ireland; then he says that it is important to have a common standard because of travel, particularly by students, between Northern Ireland and Great Britain. So, not for the first time, I did not quite follow his logic.
	I congratulate the noble Lord, Lord Rooker, on giving a comprehensive introduction to this order. As he remarked, it is the outcome of the first fundamental review of the law on sexual offences in Northern Ireland, which aims to modernise the law in Northern Ireland. We very much welcome the codifying in one order of all the sexual offences in Northern Ireland. We hope that this will make it easier for those who are involved in using sexual offences legislation to apply it in an effective way.
	As I said, we support the order, so I will not go into detail about many of the provisions before us today. In particular, we welcome the new gender-neutral offences, which can be applied to males and females where this is possible, and the removal of consent as a defence for sexual activity with a child under the age of 13, which will now always be rape. As the Assembly ad hoc committee heard from a number of witnesses, that will be particularly important for child witnesses.
	I also support lowering the age of consent in Northern Ireland to 16, thereby providing continuity with England and Wales. In many ways, there are misunderstandings about the way in which Northern Ireland's current age of consent is set, which creates unlawful carnal knowledge offences for boys, but not for girls, in consensual relationships between teenagers.
	Despite having a higher age of consent than other parts of the UK, Northern Ireland has one of the highest levels of teenage pregnancy in the UK and the current age of consent has largely been superseded by the Fraser guidelines on consent to contraceptive advice in the 1985 case of Gillick v West Norfolk. By bringing Northern Ireland into line with the rest of the UK, the order will ensure that young people have access to the same rights and protections. It is often the most vulnerable young people who will engage in early sexual activity. It is vital that they feel that they can access information and advice about their sexual health. It is important to emphasise that this provision sets 16 as the age at which it is no longer a criminal offence to engage in sexual activity. It does not encourage young people to engage in sexual activity. However, it is important that this is implemented in tandem with a strategic approach to the sexual health needs of young people. We will support this order and oppose the amendment proposed by the noble Lord, Lord Morrow.

Lord Lloyd of Berwick: My Lords, the Minister made a great deal of the need for uniformity across the various parts of the United Kingdom. It was one of his main points. Putting aside for the moment the question of the age of consent, am I not right in thinking that the criminal law of Scotland differs greatly from the criminal law of England in many respects? If that is right, does that not largely undermine his argument that there should be uniformity in this case?

Baroness Blood: My Lords, I am grateful to the Minister for the opportunity to speak during this important debate on the draft Sexual Offences (Northern Ireland) Order 2008. It is a matter of most importance to the protection of children and adults in Northern Ireland. I want at the outset to declare an interest as the Northern Ireland chair of Barnardo's. The Minister has outlined many of the positives in this legislation. It is a modernisation of the law on sexual offences in Northern Ireland, the first for 100 years, and a codification in one statute. It includes the abolition of consent as a defence for sex with a child under the age of 13; tougher sentences for those who exploit children under the ages of 13 and 15; new offences, such as sexual activity with children; laws that are gender neutral in their application; and a range of other protections, such as the abuse of trust provisions. It is most important that we realise that the vast majority of the provisions in this legislation are aimed at providing increased protection for children and are most welcome on that basis.
	One issue has dominated the debate on this order in Westminster and at the Northern Ireland Assembly; that is, the age of consent. Part of the difficulty is that the concept is not fully understood, on which I shall say a few words before dealing with other aspects of the order. The law currently does not create a criminal offence for a young person to have sex; rather it is the person with whom the child has sex who is committing offences in certain circumstances. This order recognises that a young person over the age of 16 is able to consent to sexual activity without the other person committing an offence. In doing so, it brings Northern Ireland in line with the rest of the United Kingdom, stops a contradiction in laws where a young person can get married in Northern Ireland at 16 and respects the rights of young people to make decisions about their lives.
	In reality, the new provisions, by virtue of the offence of sexual activity in Articles 16 and 20, strengthen—not weaken—the protection for children up to the age of 16. Despite having an age of consent of 17 in Northern Ireland, it has one of the highest teenage pregnancy rates in the United Kingdom and I work with many of those young people on a daily basis. This highlights that it is other social welfare mechanisms, education and prevention, and not the law, that are important in encouraging young people to avoid early sexual activity. It would be very wrong, indeed a travesty, if an incorrect interpretation of current law should be allowed to overshadow all the child protection measures in this order.
	I should like also to deal with a few other issues of policy underpinning the order and I have a number of detailed, specific questions for the Minister, to whom I have given some advance warning in the hope that he will be able to put his answer on the record in Hansard. This order is fairly complex and much of its outworking will be in the devolved areas of health and so on. Can the Minister confirm that the NIO will issue guidance on the legislation, and can he say something further on the interface between Article 20 sexual offences against children committed by children or young people and the existence of reporting requirements under Section 5 of the Criminal Law (Northern Ireland) Act 1967, which the Government have indicated will not immediately be disapplied by virtue of Article 79? Can he also confirm for the record that it is certainly not the intention to criminalise normal consenting activities between competent young people, and will the Public Prosecution Service issue guidance on this?
	Can the Minister confirm what steps officials from the NIO will take with the Department of Health, Social Services and Public Safety in the development of child protection guidance for professionals in terms of the new law in dealing with children who seek contraceptive advice? Does he agree about the absolute need for professionals to be clear on the bounds of confidentiality and when children should be referred for their protection? Finally, both the NSPCC and Barnardo's campaigned during the passage of the 2003 Act and the consultation on the order that there should be a statutory requirement on social services to lead a multi-agency assessment on children who sexually harm others? The Government decided not to do so, and I think that that was a mistake. Young people sexually harm others for a variety of reasons, and it is fundamentally important that they have access to adequate assessment, treatment and support. It is a complex policy area covering reserved and devolved matters, the police, the PPS and the courts, health and social care and so on. I seek an assurance from the Minister about the handling of these cases under the order and ask him to commit the NIO, the court service and the PPS to leading discussions about the care and prosecution pathways for this group of vulnerable children, and to ensure that an adequate inter-agency policy is devised to deal with them. Will he give a timescale for the completion of such guidance and the outcome be reported back?
	Finally, if an opinion is asked for in a vote, I urge Peers to think carefully and not to throw the baby out with the bath water.

Lord Tebbit: My Lords, I waded through the order and the explanatory memorandum and found it at times a slightly surreal experience as it entered into areas which I hope most of us have no experience of, and no wish to have it either. I thank the noble Lord, Lord Rooker, for his explanation and particularly for clarification of a point that had me slightly puzzled.
	It seems that there is a general consensus that this is overwhelmingly sensible legislation, and I find myself in difficulty only over the amendment of the noble Lord, Lord Morrow. Recently, the luck of the Irish appears to have been running out a little. No one takes any notice of a no vote south of the border, and the people are told, "Go away, you silly little Irish people. You don't understand these things. They are much too complex for you". And now, north of the border, the Government are saying rather the same sort of thing. They acknowledge that the one part of this order which is contentious, the age of consent provision, is strongly opposed, and yet their attitude is to pooh-pooh it. "Devolution is all right, but only if you do what we want you to do. We don't take your "no" seriously. Of course you will, it is hoped, have responsibility for these things in a year or two, but in the mean time we are going to take decisions against your will". That is an extraordinarily illogical position to take.
	The idea that the criminal law has to be the same right across the United Kingdom is obviously absurd. It has been said that the criminal law is different in Scotland, and there are many differences in what the Government see as a proper and appropriate way to administer a country between Northern Ireland and the rest of the United Kingdom. The example that sticks in my mind is that the Government do not have convicted terrorists in ministerial office in Great Britain, but seem to think it perfectly all right if that is what the people of Northern Ireland would like. I think that that is an extraordinary position to take. Perhaps they could have a little consistency there as well.
	The amendment proposed by the noble Lord, Lord Morrow, is sensible, practical and offers no offence whatever to rest of the Kingdom and its criminal law. I hope that the Government will think again about this.

Lord Maginnis of Drumglass: My Lords, I would have been keen to welcome the order, but the variation in the age of consent prevents me doing so. I come from 70 years of living in a sadly divided community that is struggling to find a way to live together. But how can we when those things that strongly unite us are set to be undermined by the Government? In the United Kingdom as a whole, we lament the erosion of the family unit and of corporate family life where the young would respect their elders, and where the elders would live almost exclusively for their children. Within that context, more than 70 per cent of all the communities in Northern Ireland—whom the Government tell us they wish to accept shared responsibility for their future—do not wish to have the age of consent lowered. That is a fact. Why then would the Government whip their Members in this House—where, as I have always understood it, we are sent because of our experience, expertise and judgment—to frustrate the will of a huge cross-community majority of people within Northern Ireland?
	At the same time, we are told that justice issues should be devolved. Others will address, and have addressed, the moral issues—the judgment capacity of 16 year-olds, who are the targets of all kinds of sexual predators, and the health, both physical and psychological, of our young folk—but what is the benefit of government whipping on a moral and practical issue, a change that offends all of us who strive for community stability based on family values?
	My record in this House and in the other place over the past 25 years on moral issues such as the death penalty and on principles such as 42-day detention has been consistent. I would never allow myself to be whipped to vote against community and family issues and the safety and health of young people. I appeal to all noble Lords, do not shame this House; do not abandon your care and concern for what is the will of my people in Northern Ireland. Please vote for the amendment.

Lord Clarke of Hampstead: My Lords, like many other Members of the House, I have received a considerable amount of correspondence on this order and the amendment of the noble Lord, Lord Morrow. A significant point about all the letters is that not one of the writers has said they agree with the lowering of the age of consent. It is very significant to receive a volume of correspondence all saying one thing.
	One of the letters I have received suggested that the inclusion in this order of the part concerning the age of consent is politically motivated. After referring to all the matters about which we have heard—the number of people in the polls and so on—one correspondent from Strabane said:
	"In view of this, many of us here believe that a form of political blackmail is being used in relation to criminal justice and policing powers".
	I have no idea whether the writer is right or wrong and my question to my noble friend is very clear: have the Government been involved in such trading? It is a simple question and I hope that he will confirm that our Government have not had their name sullied by such activity.
	It has been said already that a number of people of the two main religious groups are opposed to a lowering of the age of consent. I should like to reiterate the point about the 57 Members of the Assembly. If it is right and they are on record as having signed the Early Day Motion, that is clearly a majority of the people elected to represent the people of Northern Ireland—you do not need to be the brain of Britain to work that out. I popped in to see the Minister earlier to give notice of the question that I would ask, which is: why are the Government pressing this change on the people of Northern Ireland when all the evidence is that they do not want it imposed on them?
	In introducing the order this evening, my noble friend—for whom I have the highest regard and hold in the highest esteem; I am not saying this as a flowery speech because I have known the Minister for so long and respect his integrity—said that unless there was a good reason, the Government would pursue the lowering of the age of consent. I can think of no better reason than that of democracy and the voice of the people who say they do not want it.

Baroness O'Cathain: My Lords, perhaps I may intervene for literally one minute or less. Twice this evening in this debate we have been told that teenage pregnancies in Northern Ireland are higher than they are in the mainland of Britain. I rushed out to get the statistics, which show:
	"The conception rates among 16 year olds in Northern Ireland is less than half that among 16 year olds in England and Wales".
	That is according to the official statistical register, "Northern Ireland: Maternities, 113", from Registrar General's Annual Report 2006—Section 3 Births. It is right that that should be put on the record.

Lord Browne of Belmont: My Lords, I welcome the amendment tabled by my noble friend Lord Morrow, and I am thankful for the opportunity to make the House aware of the strong opposition in Northern Ireland to one particular element of the draft sexual offences order. In part, the order has much to offer the people of Northern Ireland, particularly in the protection it affords to innocent victims of sexual predators who prey on the young and the vulnerable. To that extent, I take no issue with the main provisions of the order. It is both necessary and timely.
	The basis of my personal opposition, and the catalyst for this debate today, is the proposed lowering of the age of consent from 17 to 16. I welcome the report published in February 2008 by the Northern Ireland Assembly in response to the proposed order. As someone who is proud to represent the constituency of East Belfast in that forum, I associate myself with the Assembly's response; I hope noble Lords have had sight of it and have had the opportunity to take cognisance of it. Since the establishment of the Northern Ireland Assembly, few issues have been as controversial and emotive as this. Nevertheless, when the report of the ad hoc committee was brought before the Assembly, it was passed without dissent. When a subsequent motion calling for the retention of the age of 17 for consent was tabled on 19 February this year, it was signed by over half of all the Members—Catholic and Protestant, unionist and nationalist.
	That cross-community support in the Assembly is mirrored—indeed, surpassed—by the strength of opposition among the electorate in Northern Ireland itself. As a unionist I take no joy in highlighting differences between Northern Ireland and Great Britain, but differences there are, which do not solely arise from the conservatism of Northern Ireland society, its stronger religious affiliations or some illogical intransigence or refusal on the part of Ulster people to move forward. As we have heard, the percentage of teenagers in Northern Ireland who engage in sex before the age of 16 is less than half that in England and Wales. The incidence of sexually transmitted diseases and the number of pregnancies and abortions in Northern Ireland are also very much lower. We are dealing with different circumstances, different cultural norms and trends. For that reason alone, the maintenance of different legislative provision can be justified.
	We ask the Government to take note of the opposition outlined and reconsider their order. At a time when there has been widespread condemnation of the subversion of democracy in Zimbabwe, it would be wholly inappropriate to ride roughshod over the expressed wishes of the people of Northern Ireland and their elected representatives.
	Sexual offences and other criminal justice matters remain a reserved matter yet to be devolved. I hope, as do most unionists within the Northern Ireland Assembly, that they will be devolved as soon as practically possible. The Minister is well aware that greater community confidence and indeed further financial support are necessary before that can happen. The form that a policing and justice department would take and the competences it would have remain to be discussed and agreed.
	Noble Lords will also be aware of the Sewel convention under which the Government do not legislate for matters that are devolved, or are likely to be devolved in the near future, to the Northern Ireland Assembly. I therefore urge this House to vote for the amendment that my noble friend Lord Morrow has tabled, thereby supporting the right of elected Northern Ireland representatives, with one mind and one voice, to legislate on this issue in good time.

Lord Monson: My Lords, the Government's decision to press ahead with lowering the age of consent in Northern Ireland against the will of both the majority of the elected Members of the Assembly and a substantial majority of the people of the Province seems, if I may say so, frankly colonialist. In their Explanatory Memorandum on the draft order, the Government argue in paragraph 2.1 that the order,
	"seeks to ... harmonise the body of offences and penalties with the rest of the United Kingdom".
	This justification is repeated in paragraph 7.2, which uses slightly different wording. It refers to,
	"a unique opportunity to modernize, strengthen and harmonise the body of offences and penalties with the rest of the United Kingdom".
	However, the game is given away by paragraph 7.1, which states that,
	"the law here should, as far as possible, match that in England and Wales".
	England, Wales and Northern Ireland, minus Scotland, do not constitute the United Kingdom. The Government know perfectly well that if a majority of MSPs in the Scottish Parliament voted to raise the age of consent in Scotland to 19 or lower it to 13, Westminster could do nothing about it. The argument of permanent harmonisation right across the United Kingdom simply will not wash, as my noble and learned friend Lord Lloyd of Berwick and the noble Lord, Lord Tebbit, pointed out.
	Incidentally, some noble Lords may be unaware when they talk of harmonisation that every American state is free to set its own age of consent. Students who cross state lines simply have to keep their wits about them and do their homework. The same could apply within the United Kingdom, I suggest.
	The sudden call for integration and harmonisation is a bit rich when one considers that, about 35 years ago, soon after the beginning of the Troubles in Northern Ireland, a number of distinguished Conservative Members of Parliament, two of whom later paid for it with their lives, together with a majority—not all—of Ulster Unionist MPs, called for total integration of the Province with the rest of the United Kingdom, with the abolition of Stormont and the people of Northern Ireland having exactly the same rights as the people of England, Scotland and Wales. The proposal was fought against tooth and nail all through the 1970s and 1980s, and most of the 1990s, by most of the parliamentary Labour Party with a few honourable exceptions. They argued that Northern Ireland was totally different socially and culturally from the rest of the United Kingdom and should be treated quite differently, and that there should be no question of integration. There we have a certain paradox, do we not?
	As I understand it, the objections in Northern Ireland to the lowering of the age of consent are based not only on religious and cultural considerations but on considerations both pragmatic and moral at the same time, in that the Province has vastly lower rates of unwanted teenage pregnancies, as the noble Baroness, Lady O'Cathain, pointed out, and vastly lower rates of teenage venereal disease than in the rest of the United Kingdom. People are understandably anxious to keep it that way.
	If the proposed change starts to destroy that great achievement—and it is a great achievement given the present Europe-wide moral climate—it will on balance diminish rather than enhance the sum of human happiness. For that reason, together with the considerations of democracy, I shall certainly support the Motion of the noble Lord, Lord Morrow, in the Division Lobby.

Viscount Eccles: My Lords, I shall briefly make a wider point. Every time that Parliament confers a right, that right entails a duty. Rights demand recognition. Parents, guardians, teachers and all those in positions of trust and involvement with 16 year-olds will need to remember, if the right of consent is legally extended, that they, whatever their individual views, must respect it. Parliament needs to be careful about conferring additional rights by legislation regarding matters which are better left as they are to the people and to the courts. When we do not take that due care, we time after time damage our democracy. I support the amendment.

Earl Ferrers: My Lords, the noble Lord, Lord Rooker, in his opening speech made a good exposition of the order, and there are many good things in it. However, they wrap up the one controversial aspect, which is the point to which the noble Lord, Lord Morrow, has drawn attention.
	When the Minister said that children and young people were at the centre of the proposals, I do not think that he could have been referring to this particular aspect of the proposals. We have heard that 55 per cent of Assembly Members voted against lowering the age of consent and that 70 per cent of the population do not want it lowered. I cannot understand why the Government want to go against what is universally considered the view of Northern Ireland. The Prime Minister only a short while ago said, "We are going to listen to the people". Well, the people have spoken clearly over in Northern Ireland, and I cannot see why they cannot leave it as it is. They may want the United Kingdom harmonised, but then you get the disharmony between Northern Ireland and southern Ireland, which brings its own problems. I really would have thought that the Government should not have done this, unless they are just determined to push ahead—and I do not believe that that is right.
	The Minister says that there is no reason not to pass this order, but I think that there is a jolly good reason not to pass it: I do not believe that it is the right thing to do. Mr Jeffrey Donaldson said:
	"It defies common sense, decency and democracy that the government should push ahead with this change that is so unwanted, unnecessary and detrimental to our society".
	I believe that the Government should not do that, which is why I will back the Motion.

Lord Davies of Coity: My Lords, the Leader of the Opposition made a very good case for ensuring that the constitution of Northern Ireland should be observed by the Stormont Government. If we discount the substantive element of reducing the age from 17 to 16, why does he say—after making a very good argument—that he is not going to vote one way or the other?

Lord Rooker: My Lords, I begin by thanking those who participated in the debate. I have not counted but there were probably 20 speeches. I am grateful for the noble Lords' participation and will do my best to answer their points. They have concentrated on one aspect—the latter aspect that I came to—and certainly not the general thrust of the order, which I think has received widespread support. It is a bit more complicated than simply taking one bit of it out, as I shall seek to explain.
	I quite agree that it will be much better when Northern Ireland is looking after itself in terms of policing and justice. I have made that quite clear. It will offer more suitable scrutiny than what this House or the other House gives, with Orders in Council. It will be much better. However, as I said earlier, given the number of years that this provision has been gestating, following the passage of the 2003 Act, we see no good reason to delay it. It is as simple as that.

A noble Lord: In due course.

Lord Rooker: My Lords, I do not know whether it is going to be in due course. There is no time set for devolution—that is the whole point—and because of that we are carrying on the process that we are duty-bound to follow, following the consultation.
	There is obviously considerable interest in the issue relating to the age of consent.

Lord Trimble: My Lords, the Minister said that no time had been set for devolution, but he will know that there was a target time, which was just last month, and that the current First Minister made it very clear just the other day—yesterday, if not today—that he will seriously try to achieve that devolution within a short period. So the point comes back. The Minister knows that this devolution is going to occur, if not next month or the month after, probably this year, and that the Assembly will then proceed to reverse what he is now doing. Does he realise that, in reversing that, it might also reverse things that he would not like it to reverse, other than the point under discussion?

Lord Rooker: My Lords, first, that is up to the Assembly. Secondly, as far as I am concerned, there is no justification whatsoever for claiming that devolution will occur within a specific period. Until the agreements are reached we do not know; that is the history of Northern Ireland. Until then we continue to govern, as was the case before the current devolution.
	The Assembly can do what it likes when it has authority, provided that it follows the voting system laid down. It does not just require a simple majority to change things, but a far more complicated system of voting than we have in this House. The 55 per cent referred to would not carry a change. I am not going to make a big point about that, but it is not as simple as that. Frankly, we cannot go by people signing Early Day Motions. I spent so long in the other place signing EDMs that I was challenged to vote for, only to find that I could not for other reasons. It is an expression of an opinion, and I respect that; however, it is not the vote.
	I will give more details of the support for the Government's change. I will reiterate what was said in the other place when this order was before it on the reasons to make the change. The Government—particularly my honourable friend the Minister for Criminal Justice, who has much experience in dealing with the issues—have taken careful note of a range of advice and representations on the age of consent. Different organisations have recommended different things depending on their particular experience and engagement with young people. The Government have had to reflect on the balance of that advice to see where we ought to move the legislation and whether we should change it. Given that the starting position was for uniformity unless there were compelling reasons against it, and having received advice from a whole range of organisations that we should reduce the age of consent to 16, the balance of the argument ultimately seemed to point to that change.
	I fully accept that there is a different legal system in Scotland; I did not seek to make a point about that. It has always been a different system. Nevertheless, the age of consent is 16, and if they wish to change it, they can. The fact is that if Parliament now approves this order, the age of consent will be 16 throughout the UK.
	I remind noble Lords of the organisations and individuals who have encouraged us to believe that 16 is the right age. Leading childcare organisations such as the NSPCC and Barnardo's, to which I pay tribute and which do tremendous work in Northern Ireland and the rest of the UK, have been absolutely clear with us. We take the advice of the Northern Ireland Commissioner for Children and Young People. We take the advice of the health and social services boards and eight of the 10 trusts in Northern Ireland. These are the social services organisations working with children and their families day in and day out. They tell us absolutely clearly that they believe that 16 is the right age. The police recommend it. All want to provide welfare support, encouragement and education. We are all concerned for vulnerable young people. Those organisations think that keeping 17 as the age of consent is a barrier. We have to take that advice seriously.
	It is clear that the debate in Northern Ireland has been far from one-sided. We have paid particular attention to those organisations working with children and young people. We have had to take their advice seriously. It would be wrong to dismiss the views of organisations such as the NSPCC and Barnardo's, but that is not to undermine or to criticise the authentic views of others, as we have heard tonight, which I respect.
	I add my voice to the concerns we have heard about the message that this change may be sending to young people. It is important that we send the message that we want to avoid confusion in their minds. Having a different age of consent in different parts of the United Kingdom could—could—add to that confusion. We want to make clear that this change does not signal that sex at an earlier age is the right thing—far from it. I made that point in my opening speech. We want the message to go out that young people should seek advice from agencies and counselling organisations without fear of criminalisation. We do not want young people to be deterred from obtaining advice on these important health issues, but this desire in no way signals any intent that more young people should get involved in early sexual activity. As I said earlier, it is important to make a distinction between the ethos of the age of consent and the criminal law. The criminal law seeks only to criminalise the person who has sexual activity with someone under a particular age. It does not, and never did, criminalise the act of giving consent. The young person and their conduct is not the focus of the criminal law; it is the perpetrator. It is important that that point is emphasised.
	I shall not go into teenage pregnancies in great detail, as they have been discussed. It is true that there are concerns about levels of teenage pregnancy, but there has been a marked improvement in Northern Ireland since 2000 through the teenage pregnancy and parenthood strategy. In 2000, there were 222 pregnancies to under-17s, but in 2007 that figure had fallen to 142. The number is coming down because of the advocacy, education, support and advice being provided by a range of organisations. I propose to noble Lords that the level of teenage pregnancies has nothing whatever to do with the age of consent. The Netherlands has 16 as the age of consent and has the lowest rate of teenage pregnancies in Europe. Denmark has the second lowest rate of teenage pregnancies in Europe and the age of consent is 15. Therefore, they do not need any lectures from us about marrying the two issues. Teenage pregnancy and the age of consent may come together in the public mind, but they are two entirely separate matters. The quality of the education, advice and support available are important in driving down rates of teenage pregnancies, and we all want to see that. It has not always been easy to give education, support and advice to young people in this country. People have been attacked for doing that.

Lord Tebbit: My Lords, although I do not think it is particularly germane to the argument, when the noble Lord is talking about rates of pregnancy could he be absolutely clear whether he is talking about pregnancies or births?

Lord Rooker: My Lords, I can separate the figures out. The figures I gave for Northern Ireland of 222 and 142 were absolute figures. They did not represent percentages of the population. I can provide more details. I also have figures for stillbirths resulting from those pregnancies. However, the point I am making concerns the dislocation between teenage pregnancy and the age of consent. Countries where the age of consent is lower than ours have fewer teenage pregnancies than we do.
	In response to what I have heard this evening, I want to send out two messages. One is to those engaging in sexual activity with people aged 14 or 15. A whole lot of new powers and stronger sentences are available to the courts for dealing with them. If they abuse the position of young people below the age of consent, they can expect a heavier sentence than ever before. The second message relates to the comments about the possibility that sexual predators in the Republic of Ireland and elsewhere will see the order as some kind of green light to go to Northern Ireland to abuse children. That is absolutely not the case. The message of the legislation could not be clearer. Abusers and sexual predators who go to Northern Ireland will be hit with sentences that have not been available there before. We will not tolerate sexual exploitation and abuse, but that has nothing to do with the age of consent; it has to do with how we deal with people who behave in that wholly unacceptable way.
	I shall try to respond to individual questions as it is important to get my reply on the record. As regards who supports what, it is worth reading out the list. The responses to the consultation on the draft legislation regarding the age of consent have been published so there is no difficulty in that regard. Against the change were the Christian Institute, the Free Presbyterian Church, the DUP, the UUP and the SDLP. In favour of the change were the NSPCC, Barnardo's, the Police Service of Northern Ireland, the Family Planning Association, Brook, the Children's Law Centre, the national Commissioner for Children and Young People, the health and social care trusts, the Eastern Health and Social Services Board, the Southern Health and Social Services Board, Children in Northern Ireland, Sinn Fein and the Alliance Party. That is the scale of the result of the consultation.
	I was asked by one noble Lord to leave out the changes to the age of consent. It is not quite like that. I do not think that any article in the order states that. The age of consent permeates the whole order. All offences against children are based on particular ages, as I have set out. There is no statutory age of consent as such. It is determined by the offences of sexual activity with a child under the age of 16. There is no age of consent article that one can simply strike out. I fully accept the point made by the noble and learned Lord, Lord Lloyd of Berwick, that the law in Scotland is different, but the age of consent is 16.
	The noble Baroness, Lady Blood, gave me the opportunity to deal with a couple of points that she made in her speech. I will put my response on the record now. On the reporting requirement under Section 5 of the Criminal Law Act (Northern Ireland) 1967, we have given considerable thought to the issue whereby it is incumbent on someone who knows that a serious offence has been carried out to report it to the police. The concern is that it could place health professionals, counselling staff and parents in very difficult situations, whereby they may be expected to report young people who they know are engaging in consensual sexual activity.
	The issue has been discussed at length with the Department of Health, Social Services and Public Safety in Northern Ireland. Although there is a provision in the order to take away the reporting requirement, the Executive Minister for Health has asked that we delay implementation until new safeguarding legislation for child protection is in place. As I said earlier, that is expected next year. In the mean time, I can say that it may not be appropriate in many instances to report and criminalise normal consenting sexual activity between competent young people. Northern Ireland Office officials will continue to work closely with Northern Ireland health department officials and the Public Prosecution Service on the production of guidance to remove any anxiety of the noble Baroness and others. This guidance will of course be published.
	On the noble Baroness's point about the need for mandatory guidance under the order, there will be further consultation on guidance with key stakeholders and others. The guidance will be issued prior to the enactment of the legislation. Although that may not be mandatory, it will be done seriously and inclusively because of the need to have the advice and minds of many stakeholders and organisations to help to frame the guidance so that it is both practical and useful. Northern Ireland Office officials will of course contribute to the development by the Department of Heath, Social Services and Public Safety of any guidance on child protection issues.
	The noble Baroness also asked about guidance on the handling of cases of children who sexually harm. This is a very important issue, but our view is that legislative provision for a body of law on sexual offences is not the place for provisions that deal with how the criminal justice system interacts with children who display sexually harmful behaviour. I assure her that procedures are already in place which the agencies follow when handling such cases. There will also be opportunities to consider this issue in future inter-agency discussions on guidance.
	The noble Lord, Lord Tebbit, made a point about the order in Northern Ireland. As I have said, the nature of the voting is such that it would not have passed through the Assembly anyway. I understand that the committee voted 5:3, so the vote was not unanimous, but I do not argue with the fact. I mentioned in my speech that the committee had made that point. I quoted its chairman. I gave an analysis of those in the consultation who came out in public in favour. Contrary to what some noble Lords have said, this is not a moral issue. We are dealing with criminal law. This is not about influencing teenage sexual activity. It is as simple as that.
	I answered the point about cross-community voting. My answer may not be satisfactory, but it is the one that I gave to my noble friend Lord Clarke. I am very grateful to him for giving me notice of his question. The cross-community voting system would not mean that there is majority support for this in the Assembly.
	I hope that I have dealt with teenage pregnancies.

Earl Ferrers: My Lords, the noble Lord said that we are dealing with the criminal law, and that is that. With respect, however, it is not that; it is the way in which the law affects individuals. Although he cast a number of organisations in favour and organisations against, there are not only organisations but people. The people voted very differently.

Lord Rooker: With respect, my Lords, we are talking about the criminal law, not the issue of morals. The order is about the safety of young people. We have taken a judgment that, at 16, people would be informed enough to make those decisions. As I have said and as has been discussed, with parental consent 16 is the age at which one can marry. I say to the noble Earl that the organisations that I listed work with and advise young people day in and day out in Northern Ireland. It is not as though they do not have any locus or standing; they certainly do. I do not seek to claim great numbers one way or the other; I do not have the evidence for that.

Lord Maginnis of Drumglass: My Lords, will the noble Lord clarify what appears to some of us to be the rather strange statement that the law is not based on morality, but that it is abstract and technical and that morality does not come into it? That is what he is after telling us.

Lord Rooker: My Lords, it is, in this respect. We are dealing today with non-consensual sexual activity, a criminal offence at certain ages and different activities at different ages. I have set those out and will not repeat them. Sixteen is one of the ages that has been referred to. The view is not a moral one. We are not simply saying that 16 is the age at which people should engage in sexual activity; that is not what the age of consent issue is about at all, and it is not what the order is about. That is where one can get hares flying that give a totally false impression.
	The issue has been debated in this House and the other place, and it is up to the House to come to a decision.

Lord Morrow: My Lords, I thank everyone who has contributed to the debate. It is not my intention to respond to everything that has been said. I will simply say that the House has an opportunity tonight to give a voice to the people of Northern Ireland on an issue to which more than 70 per cent of them are opposed. I wish to test the opinion of the House.

On Question, Whether the said amendment shall be agreed to?
	Their Lordships divided: Contents, 66; Not-Contents, 146.

Resolved in the negative, and amendment disagreed to accordingly.
	On Question, Motion agreed to.

Sexual Offences (Northern Ireland Consequential Amendments) Order 2008

Lord Rooker: My Lords, I beg to move the Motion standing in my name on the Order Paper.

Moved, That the draft order laid before the House on 30 April be approved. 19th Report from the Joint Committee on Statutory Instruments, 19th Report from the Merits Committee.—(Lord Rooker.)
	On Question, Motion agreed to.

Pensions Bill

House again in Committee.
	Clause 46 [Information for private pensions policy and retirement planning]:
	[Amendment No. 103 not moved.]
	Clause 46 agreed to.

Lord McKenzie of Luton: moved Amendment No. 103A:
	Transpose Clause 46 to after Clause 57
	On Question, amendment agreed to.
	Clause 47 agreed to.

Lord McKenzie of Luton: moved Amendment No. 103B:
	Transpose Clause 47 to after Clause 57
	On Question, amendment agreed to.
	Clause 48 [Objectives of the Regulator]:

Lord McKenzie of Luton: moved Amendment No. 103C:
	Clause 48, page 23, line 29, after "1" insert "(and the safeguards in sections 49 and (Inducements))"
	On Question, amendment agreed to.
	On Question, Whether Clause 48 shall stand part of the Bill?

Baroness Noakes: I wish to speak to the Question whether Clause 48 should stand part in order to raise questions about how the compliance regime will work in practice. Compliance is to be handled by the Pensions Regulator and Clause 48 amends the duties of the regulator so that it must maximise compliance with the auto-enrolment provisions of the Bill. The regulator has no existing expertise in this form of compliance work and there are concerns among the employer bodies about how it will work in practice. There is a need to reassure the business community that the compliance regime will be targeted at those who seek to avoid the employer duties and that the burden placed on employers who meet the duties is minimal. For example, the CBI believes that businesses should not be required to register with the pensions regulator the fact that they intend to comply with the Act because the Act applies to all employers without limit, so there is no need for the regulator to seek out positively its own population.
	Currently, the regulator has registers of schemes and not, of course, of employers. It would be a major task to set up a register. Will the regulator require separate registration which, as I have said, bodies such as the CBI think would be very onerous, or will the regulator receive information from HMRC which, through PAYE and NIC systems, knows the details of all employers in the system? Can the Minister say how the regulator expects compliance to work? Will it be risk-based? When will the regulator publish its compliance proposals? We agree with the CBI that simplicity is the key to minimising employer burdens and to focusing compliance work on those most likely not to comply. That was certainly the experience of implementing the minimum wage. Do the Government and the regulator agree with that?
	The Bill will have a big impact on small and medium-sized enterprises in general and on very small businesses in particular. I have already spoken to the issue of the cost of implementing auto-enrolment for SMEs and micro-businesses. However, that group, which is very large numerically, will pose particular challenges in terms of compliance. Who will be responsible for alerting SMEs to their obligations under the Act and for ensuring that those employers are aware of their compliance duties? Will it be the regulator? The regulator will be something of an alien being to most SMEs. The SMEs are more used to dealing with HMRC through PAYE and NIC compliance.
	It would seem to us, and it would certainly seem to some of the bodies which have made representations to us, that the Government ought to ensure that the contacts and expertise of HMRC are used to the maximum extent possible when implementing this Bill. By giving the regulator duties, it is not clear that that will happen. Most employers do not want to become noncompliant, but in the early days of the new system mistakes are likely to be made, especially by SMEs that generally struggle with regulatory burdens placed on them. What approach will the regulator take to achieving compliance in that group?
	Lastly, I need to raise the issue of costs. Clearly, the Pensions Regulator will need to be funded for the start-up costs of the new compliance regime as well as the ongoing costs. How will the Government ensure that those costs are borne not by existing contributors to the regulators coffers but are borne by the whole group of employers? Does that mean that everyone will receive an annual bill from the regulator? How much is that likely to be for different sizes of businesses? What about start-up costs? Will the Government use their powers to pay grant-in-aid for those costs, or will they be recovered from employers over time?
	The Minister will understand that there is considerable concern among the business community not only about the details of compliance and what the regulator will do, but also about how the financial burdens of compliance will fall in practice. I hope that he can shed light on this issue.

Lord McKenzie of Luton: I am grateful to the noble Baroness for giving me the opportunity to speak to Clause 48. It provides the Pensions Regulator with an additional statutory objective to maximise compliance with the new duties arising under Chapter 1 of Part 1. As previously discussed, we have tabled Amendment No. 103C to extend that objective so that it also covers the regulator's enforcement roles in relation to the prohibited recruitment conduct in Clause 49, and the proposed prohibition on inducements at Amendment No. 106A.
	Clause 48 amends Part 1 of the Pensions Act 2004 to ensure that the new compliance functions of the Pensions Regulator are covered by its statutory objectives. The additional objective will define and communicate the regulator's compliance role. It will ensure that the compliance approach is transparent and accountable by setting out clearly the goal of the new compliance powers that this Bill grants the regulator. It will also place the compliance regime on an equal footing with the regulator's other work, creating a firm foundation for its effective delivery.
	We do not want to disrupt the regulator's vital and successful regulatory role or its current objectives, which include protecting the benefits of members of all work-based pension schemes. That protection will extend to members of the personal accounts scheme. The regulator's new compliance functions will therefore supplement its existing functions, rather than replace them. We will work closely with the regulator to minimise the impact of this work on its current role.
	The noble Baroness asked precisely how the regulator will exercise its new powers. Like her, we are confident that the majority of employers will comply with their new duties, but need an efficient and effective compliance regime underpinning the reforms.
	The compliance regime that will be enforced by the Pensions Regulator will be crucial to the overall success of these pension reforms. As I indicated earlier today, we are proposing a three-stage compliance regime comprising educating, enabling and enforcing. The initial focus is on educating and enabling employers to meet their new duties.
	This Bill sets out a framework of powers that enable the regulator to take proportionate, graduated compliance action where those initial steps fail. Action to combat non-compliance will start with statutory notices, moving to fixed penalties and then escalating penalties if non-compliance persists. This provides a flexible sanctioning toolkit in line with the recommendations of the Macrory review. We have also built on analysis of other regulatory regimes.
	The noble Baroness asked whether all employers would be required to register. The answer is yes, they would. Clearly, information will come from HMRC about the range of employers out there, but there will be a requirement for all employers to register. She talked about small employers who will not have heard of the Pensions Regulator and she asked what we will do to help them comply. It will be the Government's role to oversee the delivery of consistent and coherent information to support the introduction of the reforms, and this will help to raise awareness among all employers that the Pensions Regulator will educate and enable employers in order to help them to meet their new employer duties. The intention is to provide tailored messages to specific segments of the employer population so that, for example, small employers receive messages that are appropriate to them. Employers will have the opportunity to explain their circumstances and obtain support at every stage. Only where there is persistent or serious non-compliance will proportionate penalties be applied.
	The noble Baroness asked about the funding arrangements and the costs of this. As noble Lords will be aware, at present the Pensions Regulator is generally funded by a levy on pension schemes, and the general levy funds the activities of the pensions ombudsman and the pensions advisory service as well as the Pensions Regulator. The levy is used to pay for a range of activities, including ensuring that schemes are competently administered, that pensions deficits are reduced in a timely way and that members' benefits are not compromised as a result of transactions such as company takeover and financing. However, we fully recognise that the Bill significantly extends the regulator's current role and responsibilities. Moreover, this role is central to the success of the reforms by helping employers to understand what they need to do to meet the new duties as well as by offering protection to individuals.
	I am therefore happy to place on record that the Government are committed to supporting the Pensions Regulator to deliver the compliance regime. Set-up costs for the compliance regime will be funded by the Government by way of a separate grant in aid funding stream, subject to parliamentary scrutiny. As noble Lords will be aware, grant in aid can be used for the exercise of the regulator's functions and to fund the set up of the compliance regime because the regulator's functions are being extended by the Bill. Expenditure and funding for the establishment of the compliance regime will be kept completely separate from the Pensions Regulator's expenditure funded by the general levy and will be accounted for separately. As part of its regular stewardship of the pensions regulator, the department will monitor both funding streams to ensure that they are put to their intended use only. We are exploring further how ongoing compliance costs will be funded, and we will take that work forward with the relevant government departments and the regulator in conjunction with the development of the compliance regime.
	There is clearly much detail to be worked out, but I hope I have set out the parameters and the arrangements under which the Pensions Regulator will operate. The compliance regime is based on the recommendations of the Macrory review, which underpins the graduated light-touch approach that I have outlined. I hope that that deals with the queries of the noble Baroness. If not, I am sure she will ask again.

Baroness Noakes: I shall. Can the Minister explain why the regulator will require every employer to register with it, given that information on employers is already held within the existing PAYE and NIC system? By definition, no different groups will be brought within the net. Why is a separate registration regime being set up, especially as the regulator will be completely unfamiliar to the vast majority of employers? The only employers who know about it are those with the nearly extinct defined benefit pension provision. Almost everybody else has no idea about the Pensions Regulator; certainly not SMEs and microbusinesses, which are currently not involved in pension provision at all. I am mystified about why the Government are going down this route.

Lord McKenzie of Luton: Let me see if I can help the noble Baroness. It is the Pensions Regulator's job to ensure compliance with this regime; therefore, it needs to possess the key relevant information. HMRC will be a key source of that information because, as we discussed earlier, it is the one database of employers across the UK.
	We envisage that the registration process will be web-based and will ask employers about the pensions arrangements that they will use to meet the new requirement. Every employer will be required to register once for each of his PAYE schemes. Information from HMRC can be used to contact employers to effect that. The Pensions Regulator will then check that registration had been completed for every employer PAYE scheme, and that checking process is likely to be highly automated. The regulator will determine the most effective approach to gathering this information in support of its objective to maximise employer compliance. The regulator will intervene early with those who do not register, using reminders and penalties where necessary.
	We recognise that seeking information from employers will impose a cost on them, but believe that that will be outweighed by gains achieved by higher compliance overall. We also believe that costs will be relatively low because most employers will complete the registration process only once for each of the PAYE schemes that they run, and will then have very low ongoing contact with the Pensions Regulator. The operational design of the registration process will take into account the need to minimise employer burdens. By enabling early identification of non-compliance, the registration process will minimise further burdens on compliant employers and help to prevent non-compliant employers gaining an unfair commercial advantage.

Lord Oakeshott of Seagrove Bay: I listened carefully to what the Minister said about costs. He was pretty clear that the extra costs of setting up the extra regime for the Pensions Regulator arising from this would be met by a separate grant-in-aid. What I did not hear him say, which perhaps he would, is: "We have not yet decided, once it has been set up, how all the extra costs of the Pensions Regulator being involved in so many schemes will be funded and shared". The noble Baroness fairly asked how we will ensure that there is not cross-subsidy from existing pension schemes. Is that still work in progress? We would be very grateful to hear how far the Government's thinking has developed. Setting up is one thing; sharing the cost of a greater regulatory regime is another.

Lord McKenzie of Luton: The noble Lord is right to press me on that matter; but he is also right to say that the question of ongoing compliance costs is still work in progress. We need to be mindful of the fact that the regulator already has powers to pursue late payments to pension schemes. At present, that activity is funded by the levy. That makes it potentially difficult to draw a distinction between the regulator's existing role and its new one, especially in the area of late payments, but that is something that we need to work through.
	I answered the question today, which I am not sure we had been asked before, about whether the levy will operate for personal accounts. It would, so there is another potential source.

Baroness Noakes: I am disappointed with the approach that the Minister seems to be taking, which is that the regulator will create lots of de novo processes existing in isolation. The regulator is probably the least appropriate body to deal with small and medium-sized enterprises, which will form the majority of the organisations with which it is required to interface. The Minister gave us a mantra of, "Educate, enable and enforce". I do not suppose that the regulator has any idea of how to educate or enable small and medium-sized enterprises, let alone micro-enterprises, whereas other parts of government have a little more existing expertise. I am very disappointed with that response.
	The noble Lord, Lord Oakeshott, rightly challenged the Minister on costs. Major employers are very clear that they would regard it as quite unfair for their levy payments to be diverted to funding the cost of compliance across the whole auto-enrolment sphere. That has nothing whatsoever to do with the purposes for which the levy is raised and would be completely inappropriate. However, the Minister says that that is work in progress, like so much of the Bill. That is a very unsatisfactory way to proceed and gives no one any assurance that the scheme will operate fairly, cost-effectively or in a sensitive way for the generality of employers, small and large.

Lord McKenzie of Luton: We get these persistent challenges and a sense of bad faith about how this will all work. We have clearly put on record our approach to compliance, being mindful of burdens on employers and doing what we can to retain existing good quality provision. The noble Baroness has to recognise that this is a framework Bill. Of course, lots of practical detail has to be worked through, some of which we cannot get under way effectively until we pass this legislation and can give the appropriate powers. It really is unfair for the noble Baroness to continue with this line. We have been very open about the basis on which this Bill is structured and how we want to see it implemented.

Baroness Noakes: The Minister was very open, but he does not have the answers to the questions. We are bringing to this Committee the concerns expressed to us, in particular by employer groups. It is not acceptable that the Minister stands there and says that they have not worked out the answers and that it is unfair to criticise them for not having done so. Day by day, the Minister exposes that this Bill is not ready to come through the parliamentary process because too little is understood. We will not pursue this again today but we will return to the theme.

Clause 48, as amended, agreed to.

Lord McKenzie of Luton: moved Amendment No. 103D:
	Transpose Clause 48 to after Clause 57
	On Question, amendment agreed to.

Lord Tunnicliffe: moved Amendment No. 103E:
	After Clause 48, insert the following new Clause—
	"Functions of the Pensions Ombudsman
	Functions of the Pensions Ombudsman
	(1) Section 146 of the Pension Schemes Act 1993 (c. 48) (functions of the Pensions Ombudsman) is amended as follows.
	(2) In subsection (7), after paragraph (ba) insert—
	"(bb) a person who has given notice in accordance with section 7 of the Pensions Act 2008 (right to opt out of membership of an automatic enrolment scheme);".
	(3) In paragraph (c)(i) of that subsection, for "or (ba)" substitute ", (ba) or (bb)"."

Lord Tunnicliffe: I have tabled this amendment to ensure that people who begin saving for their retirement as a consequence of the 2012 reforms enjoy the same safeguards as those who are currently members of pension schemes. Access to the Pensions Ombudsman is one of those safeguards. Section 146 of the Pension Schemes Act 1993 prescribes the type of complaints that the Pensions Ombudsman may investigate.
	Where a person wishes to make a complaint, or when someone wishes to complain on his behalf, it is necessary for that person to be an "actual or potential beneficiary" of the scheme. In practice, the person who wishes to complain must be a member of the scheme, have been a member of the scheme in the past or be in dispute with his employer or the scheme administrators over his right to join the scheme. These arrangements work well at present, but following the introduction of the duties on employers as part of the 2012 reforms we will see the emergence of a new class of people—those who were automatically enrolled into their employers' schemes and who subsequently opted out.
	As the Bill makes clear, a person who is automatically enrolled and opts out will be treated as though he had never been a member of the scheme in question. Such a person would not be able to take a complaint to the Pensions Ombudsman on the grounds that, being neither a current nor a past member of the scheme, he or she was not an actual or potential beneficiary. That is an undesirable outcome, as that person might well have need of the ombudsman's services in order to remedy an injustice relating to the opt-out process. We are therefore seeking to amend the Pension Schemes Act 1993 to include people who have opted out in the class of actual or potential beneficiaries, thereby giving them the right to have their complaint to the Pensions Ombudsman investigated. I beg to move.

Baroness Hollis of Heigham: I declare an interest as a trustee of the Pensions Advisory Service. Clearly, this provision will expand the role of the Pensions Ombudsman if he or she is seen as the final court of appeal for any challenge to the pensions structure. First, what has happened—and what is it therefore expected will happen—to the original proposals for amalgamating the functions of the FSA and the Pensions Ombudsman? Are we now expecting to keep the Pensions Ombudsman as a separate resource? It may be that we will wait until the Thoresen determinations are finished before we decide how that pattern will emerge.
	Secondly, given the substantial delays at the moment in getting recourse from the Pensions Ombudsman, what additional resources will there be? What extra work does the ombudsman expect to face as a result of personal accounts? Clearly, any new scheme coming up in this way is likely to generate a degree of uncertainty and people may choose to go down that route rather than other adviser or financial advice routes to have their problems resolved. My noble friend may care to write to me at some length, because I have not given him notice of these questions. It seems to me that there is still a question mark over how this function of government will develop over the next few years. Is my noble friend in a position yet to say how the Government's thinking is going?

Lord Skelmersdale: The noble Baroness, Lady Hollis, tempts me to remind her that the Government—I think under her watch—spent some time ignoring the ombudsman, which is why eventually the financial assistance scheme was set up.

Baroness Hollis of Heigham: I take issue with that. The financial assistance scheme had nothing to do with the role of the Pensions Ombudsman or its neglect. I cannot think what the noble Lord is referring to in that respect, unless he is thinking of the Parliamentary Ombudsman and not the Pensions Ombudsman.

Lord Skelmersdale: I apologise to the noble Baroness. I am reminded on all sides that it was the Parliamentary Ombudsman. However, the fact remains that, as long as the Government ignore the ombudsmen, one wonders what role they are to perform in the future. That said—I do not expect an answer—I have no problems with the amendment. As the ombudsman exists, this is a proper role to consider.

Lord Tunnicliffe: I have a sense that I should quit while I am in front. On the relationship between the FSA and the Pensions Ombudsman, the Bill does not contemplate any change. There may be an ongoing review of that area but the Bill, in a sense, notes that the involvement of the Pensions Regulator in the regulation of the schemes means that there is an ombudsman process. That general ombudsman process is carried forward by using the regulator under the regulators Act. The small technical amendment that I have just moved is to correct an exception to that generality because of the concept that someone is considered never to have been in a scheme if they have been properly enrolled and properly opted out. It addresses only that simple point. The whole issue of the appropriate level of resources for the regulator is a developing field of policy. As soon as we have more concrete proposals, we will be happy to share them with noble Lords.

On Question, amendment agreed to.
	Clause 49 [Prohibited recruitment conduct]:

Lord Skelmersdale: moved Amendment No. 104:
	Clause 49, page 23, line 34, leave out "statement made or"

Lord Skelmersdale: I have already given approval in principle to Amendment No. 106A, which concerns inducements. However, I should like to take this opportunity to probe how draconian the restrictions on employers' behaviour as a result of Clause 49 will be and how the Government intend to enforce these restrictions. Clearly it would be impossible and, indeed, counterproductive to expect employers to avoid any mention of auto-enrolment. After all, a pension plan is a significant perk, which employers should advertise to potential employees. There is also the small matter that it is the employer's duty to pass on information to employees about auto-enrolment and so on. Breach of proper recruitment conduct will therefore be a matter of judgment and, as there are generally only representatives of the employer and the interviewee present at an interview, how does the Minister expect to police this provision? I beg to move.

Lord McKenzie of Luton: I am sure that we all agree that employers should be prevented from screening out job applicants according to whether or not they may opt out of pension scheme membership. The aim of Clause 49, which was introduced by a government amendment in another place, is to prohibit certain forms of employer behaviour designed to give the indication that the job on offer is conditional on the applicant agreeing to opt out of pension scheme membership. We do not expect the majority of employers to behave in this way, but it would be naive not to anticipate that some may and we cannot allow them to gain an unfair commercial advantage by avoiding their responsibilities in this way. We are determined that employers should not be allowed to sift out applicants who wish to remain in pension schemes.
	The noble Lord's amendment would limit the scope of that prohibition by covering only questions from the employer and not statements, resulting in individuals being offered less protection. It would mean that employers could not make a statement, for example, in an advertisement indicating that non-membership of a pension scheme was required and that a job was therefore conditional on an individual's opt-out decision. Those statements would not be caught, whereas under the prohibition as it currently stands they would. There is also a risk that some employers would exploit that loophole and deliberately frame questions and statements that would otherwise meet the test in Clause 49(1). The clause as drafted will provide an effective deterrent for the small number of employers who might be tempted to try to avoid their employer duties in this way.
	The noble Lords ask how such compliance will be enforced. At the end of the day, whether the prohibition had been breached would be a question of fact and individual circumstances. That might come to the attention of the regulator in a variety of ways; for example, communication from an individual employee who has been subjected to this treatment. The arrangements within the Bill for the Pensions Regulator to seek facts and get information are the way that it would proceed. It is difficult to be specific, but I am sure the noble Lord will recognise that whether the prohibition was breached would depend on the facts of each situation.

Lord Skelmersdale: I am grateful to the Minister. He said that one way would be by a complaint by the interviewee that I illustrated, as a result of the interview. What other ways are there? That way is obvious, but it is a little more difficult to see any others.

Lord McKenzie of Luton: I can imagine that there might be a number of ways. For example, the employer might have trade union representation, which might indicate trends in how the firm recruits. There may be other ways that I cannot think of off the cuff, but in a sense it does not matter; the prohibition is there, and if people breach it there is a right to remedies.
	The noble Lord previously asked how we could ensure that the introduction of the prohibition will not stifle genuine negotiations about pension arrangements above the qualifying minimum, or that it will not prevent positive communication about pension saving from the employers during the recruitment process. Under ordinary employment law, employers and employees are currently free to negotiate and agree remuneration packages and to offer choices between different benefits, rates of pay and pension scheme membership. We do not want to interfere with any right the employer and worker may have to negotiate the type of qualifying pension arrangement that will be offered. The right to negotiate the type of qualifying pension arrangement also includes the right to change from one qualifying pension arrangement to another, with or without an inducement, even where the new pension arrangement is less advantageous to the member than the old one, provided it is still a qualifying one. Clearly, we do not want to prevent employers communicating the positive benefits of the qualifying scheme that they provide to their workers, and nothing in this measure would stop that.

Lord Skelmersdale: I am grateful for that addendum. I am glad that the Government do not want to prevent the positive benefits that can be accrued and that this measure is purely to police a negative matter, if one would like to put it like that. My mind is heartily relieved, and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord McKenzie of Luton: moved Amendment No. 105:
	Clause 49, page 24, line 13, leave out from "section" to end of line 16
	On Question, amendment agreed to.
	Clause 49, as amended, agreed to.
	Clause 50 [Compliance notices]:

Lord McKenzie of Luton: moved Amendment No. 105A:
	Clause 50, page 24, line 20, leave out from first "The" to "may" and insert "Regulator"
	On Question, amendment agreed to.

Lord Skelmersdale: moved Amendment No. 106:
	Clause 50, page 24, line 25, leave out paragraph (a)

Lord Skelmersdale: We now move to the thorny subject of compliance notices. The Explanatory Notes give an example of cases where the employer might be required to change an advertisement or an application form for a job, which is fair enough. However, that is surely covered in subsection (2)(b). Paragraph (a), however, is a little different. It states that the employer must remedy the contravention. Will the Minister again tell me how employers are expected to remedy such a contravention without changing the application form or advertisement? Surely they would have to replace their original paperwork and explain to the potential employee that the first form had been sent in error. That, in my book, would be a remediation, but perhaps Clause 50 has a wider effect than I have supposed or is suggested in the Explanatory Notes. I hope that the Minister can help me. I beg to move.

Lord McKenzie of Luton: I shall certainly try to help the noble Lord. Clause 49 prohibits certain forms of employer behaviour during the recruitment process that indicate that the job on offer is conditional on the applicant agreeing to opt out of a pension scheme. Although we do not expect the vast majority of employers to try to screen out job applicants in this way, an effective compliance regime must be in place to manage the risk that some might try.
	Clause 50 gives the Pensions Regulator the power to issue compliance notices where it believes that a contravention of the prohibition in Clause 49 has occurred. The proposed amendment would prevent the regulator issuing a compliance notice requiring a current or past contravention to be put right.
	We recognise that there will be circumstances in which a contravention of the prohibition has happened and there is nothing that the employer could do retrospectively to put it right. In those situations, we want the regulator to be able to issue a penalty notice to penalise and deter such behaviour in the future. However, there may be other circumstances in which the regulator might want to require employers to put right what they have done wrong. It would be useful for the regulator to be able to issue a compliance notice specifying what the employer needed to do and by when to remedy the situation or to prevent it being repeated. For example, the regulator might require an employer to change a specific job advertisement or application form that is in contravention of the prohibition or to issue a retraction. The clause gives the regulator the power to issue such notices. I hope that that has clarified matters for the noble Lord and that he appreciates that it will not be possible in all circumstances for what has happened retrospectively to be put right, but that there will be circumstances where it can be the appropriate remedy. That is why the clause is structured in this way.

Lord Skelmersdale: I said in my remarks that I fully understood subsection (2)(b), which relates to the contravention being remedied. The Bill states,
	"prevent the contravention being repeated".
	However, I am still confused. It would help if the Minister could give an example. He said that paragraph (a) covers situations where there is nothing that the employer can do to put the contravention right. I am surprised by that, because I should have thought that in virtually every case there was a possibility of putting a contravention right.

Lord McKenzie of Luton: There could be a one-off situation, with the recruitment of one employee when the prohibition had been breached. Let us say that a decision was taken and somebody had been appointed, but the individual concerned had not been appointed. The ability to remedy that by making that appointment retrospectively is unlikely to be available. That is one circumstance in which it may not be possible to remedy the contravention of the prohibition; in other cases, it might. If, for example, there is an ongoing recruitment exercise and the literature for all that has been produced and that literature falls foul, that is a circumstance in which it could be the case. It is obviously a question of degree, but it is right that both are catered for in the clause, so that a remedy in the circumstances where that is possible can be dealt with.
	I should clarify also that the reference to remedying a contravention in this clause does not mean that the Pensions Regulator would be able to require employers to give unsuccessful applicants a job. That simply is not the case. The emphasis here is simply on trying to prevent employers avoiding their new employer duties from the start by screening out candidates who might want to assert their new rights to join a pension scheme.

Lord Skelmersdale: The last point I certainly readily understand. I congratulate the Minister at this time of night on failing to use the word "flexibility", which subsection (2) of course gives the Pensions Regulator. But I am not going to pursue the point at this time of night. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 50, as amended, agreed to.
	Clause 51 [Penalty notices]:
	[Amendments Nos. 106ZA and 106ZB not moved.]
	Clause 51 agreed to.
	Clause 52 agreed to.

Lord McKenzie of Luton: moved Amendment No. 106A:
	After Clause 52, insert the following new Clause—
	"Inducements
	(1) An employer contravenes this section if the employer takes any action for the sole or main purpose of—
	(a) inducing a worker to give up membership of a relevant scheme without becoming an active member of another relevant scheme within the period prescribed under section 2(3), or(b) inducing a jobholder to give a notice under section 7 without becoming an active member of a qualifying scheme within the period prescribed under section 2(3).
	(2) Section 31 applies in relation to a contravention of this section as it applies in relation to a contravention of section 2(1), and sections 34 to 39 apply accordingly.
	(3) But the Regulator may not issue a compliance notice in respect of a contravention of this section unless the contravention occurred within the prescribed period before—
	(a) the time when a complaint was made to the Regulator about the contravention, or(b) the time when the Regulator informed the employer of an investigation of the contravention, if no complaint was made before that time.
	(4) A compliance notice in respect of a contravention of this section may direct the employer to take or refrain from taking specified steps in order to prevent the contravention being repeated.
	(5) For the purposes of this section a worker gives up membership of a relevant scheme if the worker—
	(a) takes action or makes an omission by which the worker, without ceasing to be employed by the employer, ceases to be an active member of the scheme, or(b) requests or authorises the employer to take such action or to make such an omission.
	(6) In this section, "relevant scheme" means—
	(a) in relation to a jobholder, a qualifying scheme;(b) in relation to a worker to whom section 8 applies, a scheme which satisfies the requirements of that section."
	On Question, amendment agreed to.
	Clause 53 agreed to.
	Clause 54 [Enforcement of the right]:

Lord McKenzie of Luton: moved Amendments Nos. 107 and 108:
	Clause 54, page 26, line 13, leave out "a worker's contract and"
	Clause 54, page 26, line 20, after "employee" insert "within the meaning of that Act"
	On Question, amendments agreed to.
	Clause 54, as amended, agreed to.

Lord Tunnicliffe: I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.
	House resumed.
	House adjourned at 9.58 pm.